Arun Jaitley may increase service tax from 15% as precursor to GST rollout
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It is likely that Finance Minister Arun Jaitley will increase the service tax from 15% to at least 16% in the run up to Goods and Services Tax (GST) rollout.
During Budget 2017, Jaitley is expected to close gap with 18% GST rate as most of the services are likely to attract a tax of 18% under GST.
GST rollout is expected to happen on July 1 as stalemate over dual control continued in the GST Council meeting.
So, the government may slap a higher service tax for three months to somewhat offset the revenue loss after the GST kicks in.
As per industry experts, a service tax closer to the GST rate will give time to consumers to adjust to the new rate.
Service tax accounts for over 14% of Indian government’s total tax revenues. In 2016-17, Rs 231,000 crore service tax accounted for total tax revenues of Rs 16,30,887 crore.
The GST Council has agreed on a four-slab structure –5, 12, 18 and 28 percent—along with a cess on luxury and sin products such as tobacco.
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During Budget 2017, Jaitley is expected to close gap with 18% GST rate as most of the services are likely to attract a tax of 18% under GST.
So, the government may slap a higher service tax for three months to somewhat offset the revenue loss after the GST kicks in.
As per industry experts, a service tax closer to the GST rate will give time to consumers to adjust to the new rate.
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The GST Council has agreed on a four-slab structure –5, 12, 18 and 28 percent—along with a cess on luxury and sin products such as tobacco.
Advertisement
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