With the GST Council’s decision coming into force, customers will have to pay 5 per cent GST on pre-packaged, labeled food items such as flour, paneer and curd, apart from hospital rooms renting more than Rs 5,000 from Monday.
In addition, hotel rooms with tariffs up to Rs 1,000 per day, maps and charts, including atlas, will attract 12 per cent Goods and Services Tax (GST), while Tetra Packs will attract and charge 18 per cent GST. . (in loose or book form) by banks for issuance of cheques.
Last month, the GST Council, headed by Union Finance Minister Nirmala Sitharaman and headed by her state counterparts, had cut the exemption list and imposed tax on several goods and services.
Based on an interim report of the Group of Ministers (GoM) on rate rationalization, the council had also removed duty reversal for goods where taxes on inputs were higher than taxes on output.
tax rates on products such as printing, writing or drawing ink; Knives with cutting blades, paper knives and pencil sharpeners; led lamp; To correct the reverse duty discrepancy, the drawing and marking instruments will be increased from 12 per cent to 18 per cent on Monday.
Also, solar water heater will now attract 12 per cent GST as compared to earlier 5 per cent.
Taxes on certain services such as work contracts for roads, bridges, railways, metro, waste treatment plants and crematoriums will also increase to 18 per cent from the current 12 per cent.
In addition, from July 18, ostomy equipment and transport of goods and passengers by ropeway will be reduced from 12 per cent to 5 per cent.
Hiring trucks, freight, where fuel cost is included, will now attract a lower rate of 12 per cent as against 18 per cent.
The exemption in GST on the transportation of passengers to and from the northeastern states and Bagdogra will be limited to economy class only.
Services provided by regulators such as RBI, IRDA and SEBI will attract 18 per cent tax and hence will have to be rented out to commercial entities.
Bio-medical waste treatment facilities will attract 12 per cent GST, while non-ICU hospital rooms exceeding Rs 5,000/day without input tax credit, 5 per cent GST will be levied to the extent of amount charged for the room.
Further, individuals will be able to claim GST exemption only for training or coaching in recreational activities related to art or culture or sports.
Also, electric vehicles, whether equipped with battery packs or not, will be eligible for a concessional GST rate of 5 per cent with effect from July 18.
Rajat Mohan, Senior Partner, AMRG & Associates, said that healthcare services by a clinical establishment have enjoyed a tax-neutral status under Indian tax laws for decades.
The government has now notified that all such clinical establishments including hospitals, nursing homes and sanatoriums will be liable to pay tax on gross room rent which exceeds Rs 5,000 per day.
“The striking question that comes to mind with respect to the amendment is that since the treatment provided by medical establishments is a composite supply, the various elements of the referred transaction cannot be artificially divided to apply the new tax liabilities. The underlying notification appears to be ultra vires the provision of section 8 which mandates a single tax on all aggregate supply transactions,” Mr. Mohan said.