gst, gst council, gst rates on services, gst rates on goods, arun jaitley, gst council meeting in srinagar
Union Finance Minister Arun Jaitley addresses a press conference during the second day of the GST Council meet at the Nehru Guest House Cheshmashahi (SKICC) in Srinagar on May 19, 2017.IANS

In what should come as a big relief to millions of Indians, the GST Council has exempted healthcare and education from tax.

The rate will be 5 percent on small restaurants, 12 percent on non-AC restaurants, 18 percent on restaurants with liquor licence and 5 percent on rail, road and air transport. Entertainment tax will be merged with service tax. Cinema houses, betting, gambling and race-clubs will attract 28 percent while telecom and financial services will be taxed at 18 percent.

Sugar, tea, coffee and edible oil will attract 5 percent.

The next GST Council meeting will be on June 3 to decide rates for gold, footwear and other items.

Tax rates on gold will be finalised at the next meeting of the GST Council on June 3.

The two-day, 14th meeting of the GST Council in Srinagar concluded today, after which finance minister Arun Jaitley, finance minister, addressed a press conference.

On Thursday, the Council had fixed tax rates for 1,211 items, ranging from consumer products like toothpaste, hair oil, to industrials and cars. Essential items like wheat, cereals and milk were exempt while luxury cars were subject to a 15 percent cess in addition to 28 percent basic rate.

The rates are expected to have minimum impact on inflation, Kotak Institutional Equities said in a note.

"In our view, GST rates in most cases are in line with the prior rates/expectations set by the government in previous briefings. As highlighted before, the anti-profiteering clause may prevent companies from retaining the benefit of lower GST rates versus current effective tax rates. Automobile and cement companies will likely pass on the higher taxes to consumers. Lastly, we do not see any major impact of the new tax rates on inflation," the brokerage said.

Here are the highlights of the brokerage's note:

Most personal care products will be taxed at 28% except hair oil, soaps and toothpaste, whose tax rate is 18%. Among food and beverage items, aerated water, chocolates, chewing gum, malted food drinks will be taxed at 28%, cakes, cornflakes, jams at 18% while the rest will be between 5% and 12%. Adhesives will be taxed at 18% but paints and varnishes at 28%.

The GST council has fixed a 28% GST rate for passenger vehicles including two-wheelers while mid-sized cars and SUVs will attract further cess. GST rates for commercial vehicles and tractors are at 28% and 12%, in-line with existing indirect tax rates. GST rates for cement are also at the highest slab of 28%, which is higher than the current 23-26% rates. The same rate is applicable for tiles, ceramics and sanitary-ware versus the current tax rate of 18-24%. The rate for consumer durables such as ACs, fans, refrigerators is at 28%, on expected lines.