Union Finance Minister has said that consequent to rationalisation of Goods and Services Tax (GST) being undertaken in the country since the implementation from July 1,2017, government should be working towards a single standard tax rate instead of 12% and 18%. Despite the harsh criticism raised against GST, except for luxury and sin commodities tax slabs have been brought down to 12 and 18%. The luxury goods are taxed in the 28% rate. This is still lower than the 31% rate charged in the pre-GST era when VAT of 14.5% and Excise duty of 12.5% coupled with Central Sales Tax that brought the total rate to 31%.
In his blog, Arun Jaitley has noted that India had the worst indirect tax system anywhere in the world.A businessman was forced to pay 17 different taxes, face 17 inspectors, file 17 returns and assessments. Therefore, there was a tendency to evade taxes as the tax rates were higher.
The Finance Minister envisages a system where there will be 0% rate for Aam Aadmi goods and services, 5% slab and single rate apart from the 28% rate for luxurious and sin goods.
Meanwhile, the 31st Meeting of GST Council has revised some rates and services-
1)GST rate on cinema tickets above Rs. 100 shall be reduced from 28% to 18% and on cinema tickets uptoRs. 100 from 18% to 12%.
2)GST rate on third party insurance premium of goods carrying vehicles shall be reduced from 18% to 12%
3)Services supplied by banks to Basic Saving Bank Deposit (BSBD) account holders under PradhanMantri Jan DhanYojana (PMJDY) shall be exempted.
4)Services supplied by rehabilitation professionals recognised under Rehabilitation Council of India Act, 1992at medical establishments, educational institutions, rehabilitation centers established by Central Government / State Government or Union Territories or entity registered under section 12AA of the Income-tax Actshall be exempted.
5)Services provided by GTA to Government departments/local authorities which have taken registration only for the purpose of deducting tax under Section 51 shall be excluded from payment of tax under RCM and the same shall be exempted.
6)Exemption on services provided by Central or State Government or Union Territory Government to their undertakings or PSUs by way of guaranteeing loans taken by them from financial institutions is being extended to guaranteeing of such loans taken from banks.
7)Air travel of pilgrims by non-scheduled/charter operations, for religious pilgrimage facilitated by the Government of India under bilateral arrangements shall attract the same rate of GST as applicable to similar flights in Economy class (i.e. 5% with ITC of input services).