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India finalises four GST rates for services

Reuters  |  NEW DELHI 

(Reuters) - has finalised four rates that will apply to services including telecoms, insurance, hotels and restaurants under the new Goods and Services (GST) which should be rolled out on July 1, Minister said on Friday.

The rates for services will be 5, 12, 18 and 28 percent - in line with those applying to goods.

Telecoms and financial services will be taxed at a standard rate of 18 percent while transport services will be taxed at 5 percent, Jaitley said.

"The net effect of Goods and Services will not be inflationary," Jaitley told reporters after a meeting of the Council in Srinagar, summer capital of Jammu and Kashmir state.

The council, comprising federal and state ministers, fixed rates on Thursday for more than 1,200 items under the GST, amid demands by some states to keep essential items under the lower category.

The new is likely to be non-inflationary as the government has kept a majority of food items, with a combined weighting of nearly 50 percent in the consumer price index, out of the net.

Basic food items like cereals, eggs and meat will attract zero while processed food items will be charged between 12 and 28 percent.

The long-awaited Goods and Services has been hailed as India's biggest overhaul since independence in 1947. It will replace a slew of federal and state levies, transforming Asia's third largest economy into a single market.

"regime will usher in lower taxes, seamless input credit, logistics savings and market share swings from unorganised to organised players," said Aditya Narain, Research head at Edelweiss Securities Ltd.

Prime Minister Narendra Modi, who completes three years of his term this month, had said the new will not cause price rises, while aiming to bring down leakages in the complex system.

(Reporting by Manoj Kumar and Rajesh Kumar Singh; Editing by Douglas Busvine)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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