Worried about a steep rise in service tax when the goods and services tax (GST) is rolled out, the government is considering a two-rate structure to minimize the impact on consumers.
Worried about a steep rise in service tax when the goods and services tax (GST) is rolled out, the government is considering a two-rate structure to minimize the impact on consumers.
Key services may be taxed at a lower rate to give relief to consumers who saw the levy increase to 14% this year from 12.36%. "There is a thinking that some essential services be taxed at a lower rate," a finance ministry official said, adding that a sudden, steep rise could pinch the common people.
There could be a standard rate and a threshold rate for select services.
The GST Bill, which has been passed by the Lok Sabha, could not be taken up in the Rajya Sabha due to opposition protests during the July 21-August 13 monsoon session of parliament.
The government is said to be looking at calling a short session to get the crucial legislation passed in time to roll out the new tax regime from April 1, 2016. While the service tax rate will increase under the GST regime - likely to 18% or more — there will be a substantial reduction in taxation on goods as the new regime will eliminate the so-called cascading of tax, or tax on tax
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