Pay higher GST on these items from Monday; exemptions reduced

Customers will have to pay more in taxes from Monday, as the government has raised GST levels for items and services that were earlier exempted or placed in a lower bracket.

Pre-packed, labelled food items like atta, paneer and curd will attract a 5 per cent GST as will hospital rooms with rent above Rs 5,000.

Hotel rooms with tariff of up to Rs 1,000/day, maps and charts, including atlases, will attract a 12 per cent Goods and Services Tax (GST), while 18 per cent GST will be levied on tetra packs and fees charged by banks for the issue of cheques (loose or in book form).

In June, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising her state counterparts, had pruned the exemption list and imposed tax on a host of goods and services.

The Council, based on an interim report of the Group of Ministers (GoM) on rate rationalisation, had also removed duty inversion for goods where the taxes on inputs were higher than those on the output.

Tax rates on products such as printing, writing or drawing ink; knives with cutting blades, paper knives and pencil sharpeners; LED lamps; drawing and marking out instruments will be hiked to 18 per cent on Monday, from 12 per cent currently, to correct the inverted duty anomaly.

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Also, solar water heater will now attract 12 per cent GST as compared to 5 per cent earlier.

Some services such as work contracts for roads, bridges, railways, metro, effluent treatment plants and crematoriums too will see tax going up to 18 per cent from the current 12 per cent.

Besides, taxes will be cut on on ostomy appliances and on transport of goods and passengers by ropeways to 5 per cent from July 18, from 12 per cent.

Renting of truck, goods carriage where the cost of fuel is included will now attract a lower 12 per cent rate as against 18 per cent.

GST exemption on the transport of passengers by air to and from northeastern states and Bagdogra will be restricted to economy class only.

Services rendered by regulators such as RBI, IRDA and SEBI will be taxed at 18 per cent and so will be renting of a residential dwelling to business entities.

Bio-medical waste treatment facilities shall attract 12 per cent GST, while non-ICU hospital rooms exceeding Rs 5,000/day will be levied 5 per cent GST, without input tax credit, to the extent of the amount charged for the room.

Besides, individuals will only be able to claim GST exemption for training or coaching in recreational activities relating to arts or culture or sports.

Also, electric vehicles, whether or not fitted with a battery pack, would be eligible for the concessional GST rate of 5 per cent from July 18.

AMRG & Associates Senior Partner Rajat Mohan said healthcare services by a clinical establishment have enjoyed a tax-neutral status under Indian tax laws for decades now.
The government has now notified that all such clinical establishments including hospitals, nursing homes, and sanatorium would be liable to pay tax on the gross room rentals which is more than Rs 5,000 per day.

“The striking question which comes to mind regarding the amendment is that since the treatment provided by the medical establishments is a composite supply, different elements of the referred transaction cannot be vivisected artificially for imposing new tax liabilities. Underlying notification seems to be ultra vires the provision of section 8 that mandates a single tax on all composite supply transactions,” Mohan added.