Lower GST rate for insurance, telecom likely
The Centre and states are working to ensure there is a lower GST burden on telecom and financial services, a move that will keep a check on insurance and phone bills, even as states pitch for concessions for products such as ‘puja samagri’ and textiles.
Sources told TOI the Yogi Adityanath government in UP has asked the GST council – which begins its two-day deliberations on deciding rates on Thursday – to keep zero levy on ‘puja samagri’ instead of the proposed 18 per cent.
The council, comprising state finance ministers and led by Union finance minister Arun Jaitley, is due to decide product-specific rates, while deliberating on a two-tier slab for services with 12 per cent and 18 per cent being talked about as possible rates. In the case of telecom and financial services, the rates may be kept at 5 per cent to ensure that insurance premiums or phone bills do not jump massively after GST. Issues such as the levy on gold and silver as well as the inclusion of handloom, handicrafts and bidis are to be decided by the council.
The GST council had agreed to four slabs for goods — 5 per cent, 12 per cent, 18 per cent and 28 per cent — along with a cess on “sin and luxury goods” such as high-end cars, cigarettes, pan masala, soft drinks and coal. “The product-specific rates have more or less been finalised barring a few contentious items, which will be decided by the ministers when they meet on Thursday,” said a source privy to the discussions.
A state government official, however, said some of the proposals put forward were making the whole structure complicated when the idea was to simplify the tax regime. For instance, there is a move to fix the tax rate based on the end-use for products such as fertiliser. States have other demands too.
Punjab finance minister Manpreet Badal, for instance, is seeking low taxes on textiles and cycles, arguing these are activities that involve
In addition, his state has a specific demand related to liquor charge, which in Punjab is a fee, and should be treated as service tax. Similarly, Haryana finance minister Captain Abhimanyu said the GST council needed to ensure that there is no increase in the price of farm goods, which have been exempted from the new levy. At the same time, Abhimanyu realises the need to ensure that farm equipment face a levy, but that should not be more than 5 per cent. Source -http://economictimes.indiatimes.com [18-05-2017]