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GST on services: Industry reacts in mix

GST on services: Industry reacts in mix

New Delhi/Srinagar, May 19 (UNI) In line with tax slabs for Goods, the Goods and Services Tax (GST) Council today finalised the tax rate for services, paving the way for smooth implementation from July 1 this year. “AC restaurants and those with liquor licence to charge 18 per cent GST, while 5-star hotels will levy 28 per cent; hotels with tariff of Rs 1,000-2,500 will have to pay 12 per cent rate,” said Finance Minister Arun Jaitley at the end of the meeting in Srinagar. The Council approved the tax rates for 1,211 items, of which seven per cent will be exempted, 14 per cent will be in the five per cent slab, 17 per cent in the 12 per cent category, 43 per cent in the 18 per cent segment, while 19 per cent of goods will go into the top tax bracket of 28 per cent. The industry leaders reacted in a mix tone and tenor. Some have welcomed the finalised rates while others have felt that the development would further stress their industry. Reacting in positive the auto makers association SIAM said the Government has done well to ensure stability in taxation while at the same time moderating the taxes wherever they were too high. “The rates are as per the expectations of the industry and almost all segments of the industry have benefitted by way of a reduced overall tax burden in varying degree. This will pave the way for stimulating demand and strengthening the automotive market in the country, paving the way for meeting the vision laid down in the Automotive Mission Plan 2016-26”, said Vinod Dasari, President, SIAM. The hospitality sector also reacted in similar tone. "We welcome this step by the Government. A lower tax rate for budget hotels sector will ensure that the industry's quality upgrade continues while delivering standardised accommodation to millions of middle-class travellers. This will also save and create thousands of new jobs which could have been impacted under higher tax-rates. Hotels are the single biggest contributor to tourism industry which accounts for 7.5 per cent of the GDP,” Ritesh Agarwal, Founder and CEO, OYO. Abhishek Bansal, Executive Director of Pacific India Group said, “This is indeed a significant step towards indirect tax reforms. Apart from reducing the general expenditure burden on the customer the bill will enable ease of doing business with greater transparency and mobility across state borders.” “We welcome move to declare the GST rates. The rates declared are on expected lines except on IT products, which seem to be on the higher side. Clarity is awaited on GST on services and treatment of area based exemptions. Clarity is also required on differential duty on imports and local manufacturing to see the full impact of GST,” said Mr Rajeev Jain, Director and Group CFO, Intex Technologies. However, the telecom services provider association said that the finalised rate of 18 per cent would further aggravate the already bleeding industry. “Telecom industry hails GST as an iconic reform but we are disappointed with announced rate of 18 per cent. We had submitted to the government that consideration must be given to the present financial condition of the sector and any rate beyond the existing rate of 15 per cent makes the telecom services more expensive for the consumer. It will augment the existing burden of the industry further. This is also likely slowdown the planned rollout of infrastructure across the country and will have an impact on flagship govt initiatives like Digital India, Cashless India and others,” said Rajan S Mathews, Director General, COAI. "The fitment of a GST rate of five per cent on edible oils as approved in the 14th GST Council meeting is more or less on expected lines. However, the fitment of a GST rate of 12 per cent on Soya Bari and five per cent on soya flour comes as a disappointment,” Dinesh Shahra, Founder & Managing Director, Ruchi Soya Industries. UNI ASH SNU 1943

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