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Services to have 4-slab GST rates, no decision on gold

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Arun Jaitley

Srinagar, May 19:  In a move which is expected to bring prices down from the current levels, the Goods and Services Tax (GST) Council on Friday decided on a four-slab tax rate for services along with the novel concept of input credit for goods used.

The Council concluded its two-day meeting here with the decision to apply the same four tax rate slabs for services as for goods, exempting, however, healthcare and educational services from the purview of the GST.

However, no consensus could be reached on the rate to apply on gold as well as on beedi, and the Council will meet again on June 3 in New Delhi for a decision in this regard.

Briefing reporters here following the meeting, Union Finance Minister Arun Jaitley said that under GST, services will get the benefit of input tax credit for the goods used, effectively making the real incidence of taxation lower than the headline taxation rate.

He said that while “luxury services” would attract the highest rate of 28 per cent, health and education services would be exempt categories.

Jaitley said there would be a 5 per cent tax on carriage of goods by rail, road and air transport services because their main input is petroleum.

Work contracts currently attract central tax at 6 per cent, while state taxes vary between 1-5 per cent, but no input credit is available for these services, the minister noted.

“Most of the inputs for work contracts… cement, steel are taxed at 28 per cent,” he said.

“The uniform GST will be at 12 per cent while the entire credit inputs will now be available and, thus, the level of taxes will come down below the present level,” he added.

“Those paying service tax will not be able to take benefit of input credit as petroleum not in GST,” he said.

IT, telecom and financial services will be taxed at the rate of 18 per cent.

While five-star hotel services will be taxed at the highest 28 per cent, restaurants with a turnover of Rs 50 lakh and less would be levied at 5 per cent.

“Non-air conditioned restaurants will have 12 per cent, while air-conditioned restaurants will have a service tax of 18 per cent,” Jaitley said.

“Those restaurants located inside 5-star hotels will have same service tax as applicable to the 5-star hotels,” he added.

He also said that entertainment tax will be merged with the service tax at 28 per cent.

Hotels, gambling, race club betting and cinema will all be levied GST at 28 per cent.

“The net effect of GST will not be inflationary. There is a set of exemptions for services… we are grandfathering most of the existing exemptions because we don’t want any adverse impact of taxation in those areas,” Jaitley said.

“Once input credit starts, it will have a positive impact,” he added.

Speaking to reporters after the meeting, Kerala Finance Minister Thomas Isaac said that “not in a single case has there been an increase in taxes from before”.

The Council on Thursday approved the tax rates for 1,211 items, of which 7 per cent will be exempted, 14 per cent will be in the 5 per cent slab, 17 per cent in the 12 per cent category, 43 per cent in the 18 per cent segment, while 19 per cent of goods will go into the top tax bracket of 28 per cent.

Thus an overwhelming 81 per cent of goods will attract tax of 18 per cent or below. Only 19 per cent of items will be taxed at the highest rate of 28 per cent.

(IANS)

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Karnataka politics, oil prices depress equity market

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SENSEX-

Mumbai, May 21: Formation of a non-BJP government in Karnataka, along with weakness in global indices and rising crude oil prices, pulled the key Indian equity indices to close in the negative territory for the fifth consecutive session on Monday.

According to market observers, automobile, consumer durables and healthcare stocks slumped during the day’s trade.

After opening on a flat note, the indices traded higher during the early hours in the day but were unable to hold on to the gains for long.

At 3.30 p.m., the wider Nifty50 of the National Stock Exchange (NSE) provincially closed at 10,516.70 points, down 79.70 points or 0.75 per cent from the previous close of 10,596.40 points.

Similarly, the barometer 30-scrip Sensitive Index (Sensex) of the BSE settled in the red. It had opened at 34,873.16 points, closed at 34,616.13 points (3.30 p.m.) — down 232.17 points or 0.67 per cent — from its previous session’s close of 34,848.30 points.

The Sensex touched a high of 34,973.95 and a low of 34,593.82 points. The BSE market breadth was bearish with 1,969 declines against 680 advances.

The major gainers on the BSE were State Bank of India (SBI), Tata Consultancy Services (TCS), Coal India, Axis Bank and ICICI Bank, while Sun Pharma, Dr. Reddy’s Lab, Yes Bank, Tata Motors and Tata Motors (DVR) were the major losers.

On the NSE, the top gainers were SBI, BPCL and Coal India. The major losers were Dr Reddy’s Lab, Sun Pharma and UPL.

IANS

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In five years, private banks see 450 percent hike in NPAs

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New Delhi, May 21: Data of last five years revealed that the Non-Performing Assets of private banks on a surge, with a 450 percent hike in gross NPAs of these lenders from Rs 19,800 crore at the end of financial year 2013-2014 to Rs 109,076 crore at the end of March 2018.

According to the Indian Express report, Among the banks that have accumulated a huge rise in bad loans are ICICI Bank, Axis Bank, HDFC Bank, Kotak Mahindra Bank, Federal Bank and Yes Bank.

ICICI Bank is on top of the NPA list with Rs 54,063 crore in bad loans. It has recorded a 514 percent increase in NPAs in five years – from Rs 10,506 crore in FY 2013-14 to Rs 54,063 crore in March 2018, the IE report stated.

Axis Bank saw a 988 percent jump in its bad debts in last five financial years. The Bank’s bad loans have climbed up from Rs 3,146 crore in FY 2013-14 to Rs 34,249 crore in FY 2017-18, the report said.

The Reserve Bank of India (RBI) had recently imposed a fine of Rs 3 crore on Axis Bank for violations of NPA classification.

While HDFC Bank’s NPAs rose from Rs 2,989 crore to Rs 8,607 crore in the last five financial years.

Yes Bank’s NPAs jumped from Rs 175 crore in FY 2013-14 to Rs 2627 crore in 2018.

Last year, the RBI in a risk assessment discovered that Yes Bank had under-reported its NPAs by Rs 6350 crore.

However, Yes Bank is not alone in under-reporting NPAs. From ICICI to HDFC to Axis Bank, all have invited flak from the RBI for asset divergence. In March 2017, the RBI in its assessment had found that HDFC had under-reported its NPAs by Rs 2052 crore.

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Petrol, diesel prices hit all time high; rates hiked for 8th day in row

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Petrol

New Delhi, May 21: Petrol and diesel prices on Monday were increased in the range of 33-34 paise per litre and 25-27 paise per litre across Delhi, Kolkata, Mumbai and Chennai. That marked fresh all-time highs of petrol and diesel prices in Delhi.

On Sunday, petrol was priced at Rs 76.24 per litre in Delhi, more than the previous all-time high price of Rs 76.06 reached in September 2013. Diesel prices had been registering new all-time highs for past few sessions. With effect from 6 am, Monday, petrol was sold at Rs. 76.57 per litre in Delhi while diesel retailed at Rs. 67.82 per litre, according to Indian Oil Corporation.

Monday’s revision marked an eighth consecutive hike in petrol and diesel prices in the four metros.

Prior to these hikes, petrol and diesel prices were not raised for about three weeks before Karnataka elections. Because of that, oil marketing companies (OMCs) needed to raise petrol prices by Rs. 4.6 per litre, or 6.2 per cent, and diesel rates by Rs. 3.8 per litre, or 5.8 per cent, according to brokerage Kotak Institutional Equities.

While the crude oil prices are near their 2014 highs the rupee has weakened by more than 6 per cent so far this year. That is why domestic petrol and diesel prices may continue to rise in the very short term, say experts.

According to a report of The Economic Times Union Petroleum and Natural Gas Minister Dharmendra Pradhan on Sunday had said the hike in the fuel prices is due to the less production of oil in the Organization of the Petroleum Exporting Countries (OPEC) and hike in crude oil price in the international market. The Union Minister also assured the citizens that the Indian government will soon take out a solution to tackle the situation.

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