GST Council discusses removing exemptions for many services

At its two-day meeting that started here on Tuesday, the GST council will deliberate on the recommendations for withdrawing the GST waiver on a wide range of services, including hotel accommodation below Rs 1,000 per day, sources said. The Council, led by Union Finance Minister Nirmala Sitharaman and representatives from all states and UTs, will discuss the recommendations of a group of state finance ministers, led by the Chief Minister of Karnataka, Basavaraj S Bommai, on tariff rationalization, including correction of the reverse rate structure to simplify the rate structure.

Sources said the GoM has recommended that the zero per cent tax rate on hotel accommodation below Rs 1,000 per unit per day be replaced with a 12 per cent rate as this exemption is prone to abuse. It also recommended a 5 percent GST levy on room rent (excluding ICU) charged for hospitalized patients where hospital room costs exceed Rs 5,000 per day.

It wants all postal services except postcards and domestic letters, book mail and envelopes weighing less than 10 grams to be taxed. The GoM has recommended that checks, loose or in book form, should also be taxed at 18 percent.

The government is in favor of repealing the exemption that has been granted for the letting of houses by companies for residential purposes. GST exemption for business-class air travel to and from Northeastern states and Bagdogra in West Bengal should be revoked, sources familiar with the government’s recommendations said.

The GoM also wants the GST exemption to be revoked when slaughtering animals for a business entity; fumigation in a warehouse of agricultural products; and storage or storage of nuts, spices, copra, sugar cane, cane sugar, raw vegetable fibers such as cotton and jute, indigo, raw tobacco, betel leaves, coffee and tea. However, the exemption from tax on services for the storage and storage of grains, pulses, fruits and vegetables should remain, it proposes.

The GoM also wants exemption from tax on services provided through training or coaching in recreational activities in the field of art and culture to be revoked. Services provided by regulators such as RBI, IRDA, SEBI, FSSAI and GST Network should also be taxed, the GoM has proposed to the Council. tax on renewable energy equipment up to 12 percent.

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