GST rates: Services to have 4 slabs: Education, healthcare exempted

GST rates: Services to have 4 slabs: Education, healthcare exempted

May 20, 2017

New Delhi: The GST (Goods and Services Tax) Council yesterday finalised tax rates for services. Education and healthcare have been exempted from the GST regime. The long-awaited GST has been hailed as India’s biggest tax overhaul since Independence in 1947.

“India has finalised four tax rates that will apply to services including telecoms, insurance, hotels and restaurants under a new sales tax which should be rolled out on July 1,” Finance Minister Arun Jaitley said.

The tax rates will be 5, 12, 18 and 28 percent in line with those applying to goods. Telecoms and financial services will be taxed at a standard rate of 18 percent while transport services will be taxed at 5 percent and the tax rate on gold has not been finalised yet and the Council will meet again on June 3.

The new tax rates would affect everything from your restaurant visits, movie dates, visits to the salon and even your phone bills. Rail, air and road transport will fall in the 5 percent tax slab.

Non air-conditioned restaurants will attract a tax levy of 12 percent whereas air-conditioned restaurants will fall in the 18 percent tax bracket. Hotels with tariff between Rs. 2,500 and Rs. 5,000 will attract a GST of 18 percent, whereas hotels with tariff of above Rs. 5,000 will fall under the 28 percent tax slab. However, hotels with tariff under Rs. 1,000 are exempt from the GST regime.

The Council approved the tax rates for 1,211 items, of which 7 percent will be exempted, 14 percent will be in the 5 percent slab, 17 percent in the 12 percent category, 43 percent in the 18 percent segment, while 19 percent of goods will go into the top tax bracket of 28 percent. 81 percent items will attract tax of 18 percent or below, while 19 percent of items will be taxed at the highest rate of 28 percent.

A quick guide to India’s 2017 GST rates

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Here is a low-down on the tax slab these items would attract:


GOODS: No tax will be imposed on items like fresh meat, fish, chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasadam, salt, bindi, sindoor, stamps, judicial papers, printed books, newspapers, bangles and handloom.  

Services: Education, Healthcare, Hotels and lodges with tariff below Rs 1,000, grandfathering service has been exempted under GST.

5% TAX

Goods : Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent and lifeboats will attract tax of 5%.

Services: Transport services (Railways, air transport), cabs like Ola and Uber, small restaurants will be under the 5% category because their main input is petroleum, which is outside GST ambit.

12% TAX  

Goods : Frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausages, fruit juices, bhujia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine and cellphones.

Services: Non-AC hotels, business class air tickets, fertilisers and work contracts.

18% TAX   

Goods :Most items are under this tax slab which include flavoured refined sugar, pasta, cornflakes,pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors.

Services: AC hotels that serve liquor, telecom services, IT services, branded garments and financial services.

28% TAX  

Goods : Chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with chocolate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles and aircraft for personal use, will attract 28% tax – the highest under GST system.

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Services: 5-star hotels, race club betting and cinema.


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