NEW DELHI: As Team GST – comprising state ministers and finance secretaries – descends on the Capital for crucial meetings starting Tuesday, all eyes are on how the all-powerful body deals with services in the 12% and 28% slab, as well as some in the 18% bracket.Services such as hotel rooms that cost up to Rs 7,500 a night are in the 12% bracket while the ones above the threshold are in the 18% segment. Given that the Centre – which has floated the revamp and simplification plan – is keen to end classification problems, it remains to be seen how the services are handled. Same is the case with some others such as air travel, where economy class and business class are in different slabs.Given the revenue implications, some of the switches are not easy. For instance, there is recognition that the levies on some of the banking services at 18% is high but it may not be feasible to change it immediately.
In the case of insurance, however, the changes in the rates for term and health covers will, however, result in two different rates. So, you will continue to pay 18% for insuring your car or for a householder’s policy.There are demands to ease the rates on some of the common use services. For instance, maintenance charges for apartments face an 18% levy in case the payment exceeds Rs 7,500 a month, even if it is to the RWA or the apartment owners’ association. Apartment owners have argued that in most condominiums the maintenance charges top the level even for three-bedroom houses.There are others too, but the focus of the current exercise appears more on fine-tuning things on the goods side, although services such as salon may see tweaks.Some services like those related to entry into casinos are expected to move to the 40% slab for sin and luxury goods.While the GST Council meets on Sept 3 and 4, the fitment committee, comprising of officials from states, will discuss the details on Tuesday.Apart from lowering the burden on the common man, the idea is to simplify the regime by removing the 12% and 28% slabs with 99% of the former slab’s items likely to move into the 5% segment.
