The GST Council in its meeting in Srinagar on 19 May 2017 has considered and finalised GST rates to be applicable for different types of services. Outlined below are the GST rates of key services:
Major services other than those covered under reverse charge
|
Sr. no. |
Particulars |
Effective rate of tax as per the current legislation |
Effective rate of tax under GST |
Availability of ITC* under the GST regime |
|
1 |
Renting of immovable property |
15% |
18% |
Available |
|
2 |
Telecommunication |
15% |
18% |
Available |
|
3 |
Supply of food/drinks in outdoor catering |
15% |
18% |
Available |
|
4 |
Transfer of the rights to use goods |
15% |
GST rate and cess as applicable to similar goods |
Available |
|
5 |
Composite supply of works contract (immovable property) |
6%/10.5% |
18% |
Available (credit restricted if not used for further supply of works contract services) |
|
6 |
Selling of space for advertisement in print media |
Currently under negative list |
5% |
Available |
|
7 |
Construction of a complex, building, civil structure or a part
thereof, intended for sale to a buyer, wholly or partly. |
6% |
12% |
Available |
*Input Tax Credit
Major services covered under reverse charge
|
Sr. no. |
Particulars |
Effective rate of tax as per the current legislation |
Effective rate of tax under GST |
Availability of ITC under the GST regime |
|
1 |
Rent-a-cab services provided by an electronic commerce operator. (If the fuel cost is borne by the service recipient, then 18% GST will apply) |
7.5%/6% |
5% (GST to be discharged by the electronic commerce operator) |
Not available |
|
2 |
Rent-a-cab services provided by a person other than electronic commerce operator |
7.5%/6% |
Not covered under RCM# under GST |
Not available |
|
3 |
Manpower recruitment services |
15% |
18% (not covered under RCM under GST) |
Available |
|
4 |
Works contract services |
6%/10.5% |
18% (not covered under RCM under GST) |
Available (credit restricted if not used for further supply of works contract services) |
|
5 |
Transfer or permitting the use or enjoyment of a copyright relating to original literary, dramatic, musical or artistic work. |
Not under RCM currently |
12% |
Available |
|
6 |
Goods transport agency |
4.5% |
5% |
Not available |
|
7 |
Legal consultancy services |
15% |
18% |
Available |
|
8 |
Sponsorship services |
15% |
18% |
Available |
|
9 |
Director sitting fees |
15% |
18% |
Available |
|
10 |
Import of services |
15% |
18% |
Available |
|
11 |
Ocean freight |
4.5% |
5% |
ITC of only input services available |
#Reverse charge mechanism
- It may be noted that (Central Board of Excise and Customs) CBEC while publicising the above has clarified that the information will be uploaded immediately after the GST Council's decision and it will be subject to further vetting during which the list may undergo some changes.
- You can visit the links below for ready reference of the
following:
- Schedule for GST rates for services along with the list of exemptions – Click here
- List of services under reverse charge as approved by the GST Council – Click here
- Proposed new scheme for classification of services – Click here
SKP's comments
- Although the rates of tax on services would increase under GST from the current rate of 15% to 18% as per the Finance Minister, the effective rate of tax should not rise since increased credit of input taxes would now be available.
- The majority of the exemptions covered under the current legislation have been continued under GST.
- Major relief is provided to the businesses by the exclusion of rent-a-cab services (other than those provided through electronic commerce operator) from the list of Reverse Charge Mechanism (RCM) services.
- Restriction from availing Input Tax Credit (ITC) in certain cases goes against the liberal credit regime promised under GST.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
