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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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HDFC Bank cuts interest rates on loans by 20 bps

Banks review MCLR every month. Last month the HDFC Bank had reduced MCLR across tenors by 5 bps.

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HDFC Bank

Mumbai, July 7 : The HDFC Bank has reduced the marginal cost of funds-based lending rates (MCLR) on loans across tenors by 20 basis points with immediate effect.

Following the reduction, MCLRs of the bank will range from 7.10 per cent to 7.65 per cent.

The bank”s overnight MCLR now stands reduced to 7.10 per cent and its one-month MCLR is 7.15 per cent. One-year MCLR will now be 7.45 per cent, while three-year MCLR stands at 7.65 per cent.

Banks review MCLR every month. Last month the HDFC Bank had reduced MCLR across tenors by 5 bps.

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Ola joins PhonePe to boost its digital payments experience, introduces initial cashback offer

As part of an introductory offer, customers can avail up to Rs 200 in cashback on the first two rides when paid using PhonePe, said Ola.

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ola cab

New Delhi, July 7 : Ride-hailing major Ola on Monday announced its strategic partnership with PhonePe to enhance its digital payments experience for its customers.

Ola users can now access experience on the Ola app. Currently, the feature has been rolled out on Android and will be available on iOS soon.

“As PhonePe continues to drive digital payment adoption across the country, we are excited to partner with them to drive this seismic change that will enable us to move a step closer to becoming a Digital India,” Anand Subramanian, Spokesperson at Ola, said in a statement.

This partnership will also enable PhonePe to offer their services to millions of customers on the Ola platform.

“We are excited to partner with Ola, India”s leading mobility services provider, to enable a seamless and convenient payment experience for our customers,” added Ankit Gaur, Director, Business Development at PhonePe.

As part of an introductory offer, customers can avail up to Rs 200 in cashback on the first two rides when paid using PhonePe, said Ola.

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Gold may cross Rs 52,000 per 10 grams by Diwali

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smuggling gold price

New Delhi, July 6 : The price of gold in the spot and futures markets remained soft for the fourth consecutive day on Monday, but during the corona period the fundamentals of the precious metal are strong due to which it may touch a new high later this year.

The demand for the yellow metal may not be much in the upcoming festive season due to the uncertainty caused by the corona crisis, but considering the investors interest in gold, its price is expected to cross the psychological level of Rs 52,000 per 10 grams by Diwali.

On July 1 last week, gold had risen to Rs 48,982 per 10 grams on the domestic futures market — Multi Commodity Exchange (MCX), which is the record level so far, while the price of gold in the domestic spot market has breached the Rs 50,000 per 10 gram mark.

At the same time in the international market, gold prices are being speculated to go up to $2,000 per ounce. Last week, on July 1, gold rose to $1807.70 per ounce, which is the highest level since September 21, 2011, when the price of gold was $1,812 per ounce, while gold on Comex was recorded at the record level of $1911.60 on September 6, 2011.

Ajay Kedia, director of Kedia Commodity, told IANS that all the fundamentals of gold are strong at the moment and the spot demand is also strong due to which the price of the yellow metal can breach the Rs 52,000 per 10 grams level on MCX till Diwali, while on Comex it can go up to $2,000 per ounce.

When asked about the reasons for the slowdown in the demand for gold in the last four days, Kedia said that the strength of the rupee in the domestic market has put pressure on the price of gold, while the price softening in the international market was triggered by good economic data in the United States, which indicates signs of recovery in economic activity affected due to the corona crisis. However, this is transient and gold will remain bullish in the long term.

Anuj Gupta, deputy vice president (energy and currency research), Angel Broking, said that gold has softened slightly due to the rebound in the stock market and recovery in the rupee, but investment in gold in an environment of uncertainty created by the outbreak of coronavirus will remain robust. He said that in times of crisis, the investor prefers a safe investment such as gold.

The traders of the bullion market also predict that gold will continue to rise this year.

India Bullion and Jewellers Association (IBJA) National Secretary Surendra Mehta told IANS that 24 carat gold price without GST would cross Rs 52,000 per 10 grams in the spot market by Diwali. However, at this level the price will not last long and will break soon. He said that the main reason for the rise in gold prices is the reduction in interest rates by the central banks worldwide during the corona period, due to which investors demand in gold is likely to stay.

However, Shanti Bhai Patel, president of the Gem and Jewellery Trade Council of India (GJTCI), expects a further rise in gold prices. He says that at the moment demand is more in gold than in jewellery, which is likely to continue.

Patel said gold reached close to Rs 51,000 per 10 grams last week, but it is not difficult for it to go up to the Rs 55,000 level due to increased demand during Diwali and Dhanteras. He however, added GST also to the price which is currently 3 per cent. He said in Ahmedabad, the price of 24 carat gold jumped to Rs 50,600 per 10 grams last week.

On MCX, August expiry futures gold was trading at Rs 48,000 per 10 grams at 1.42 p.m. on Monday, with a fall of Rs 46 from the previous close. At the same time, the silver September futures was trading at Rs 49,265 per kg with an increase of Rs 88 from the previous close.

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