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Two tax slabs for services likely; Council is examining proposal
Updated on: Jul 13th, 2021
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3 min read
Updates from April 21st, 2017
Until now, all services were taxed uniformly at the rate of 15% except for seventeen services that were on the exempt list. Now, the GST Council’s fitment committee is deciding whether taxing all services at 18% is better than using two distinct slabs for services – at 12% and 18%. Using two slabs will reduce the prices of some services while increasing it for others, thus creating a balance for the sector.
A uniform GST at 18% will significantly increase the prices of all services and might affect the sector negatively. Though the initial plan was to tax all services equally, there is talk of putting services used regularly by the common man in the 12% bracket so as to reduce the tax burden on the end consumer.
As reported in Moneycontrol
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Quick Summary
From April 21, 2017, services were taxed at 15%, with exceptions. GST Council is deliberating between 18% uniform tax or 12% and 18% slabs for services. Two slabs aim to balance pricing variations across services, while a uniform 18% tax may increase prices significantly. There are discussions on placing common man services in the 12% bracket to reduce consumer tax burden.
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