GST Council to discuss removing exemptions on host of services

Chandigarh: The GST Council in its two-day meeting that began here on Tuesday will deliberate on the recommendations for withdrawal of GST exemption on a host of services including on hotel accommodation of less than Rs 1,000 per day, sources said.

The Council, headed by Union Finance Minister Nirmala Sitharaman and including representatives of all states and UTs, will discuss the recommendations of a group of state finance ministers, headed by Karnataka Chief Minister Basavaraj S Bommai, on rate rationalisation including correction of inverted duty structure to simplify the rate structure.

Sources said the GoM has recommended that zero per cent tax rate on hotel accommodation of less than Rs 1,000 per unit per day be replaced by a 12 per cent rate as this exemption was prone to misuse.

It also recommended a levy of 5 per cent GST on room rent (excluding ICU) charged for hospitalised patients where the hospital room charges are above Rs 5,000 per day.

It wants all post office services other than postcards and inland letters, book post and envelopes weighing less than 10 gm, to be taxed.

Also, cheques, loose or in book form should be taxed at 18 per cent, the GoM has recommended.

The GoM favours withdrawal of exemption given to renting of residential dwellings by businesses for residential use. GST exemption to business class air travel to and from North-Eastern states and Bagdogra in West Bengal should be withdrawn, sources aware of the GoM recommendations said.

The GoM also wants GST exemption to be withdrawn on slaughtering animals for a business entity; fumigation in a warehouse of agriculture produce; and storage or warehousing of nuts, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton and jute, indigo, unmanufactured tobacco, betel leaves, coffee and tea.

However, services tax exemption for storage and warehousing of cereal, pulses, fruits, and vegetables should continue, it suggests.

The GoM also wants exemption on tax on services rendered by way of training or coaching in recreational activities relating to arts and culture be withdrawn.

Also, services rendered by regulators such as RBI, IRDA, SEBI, FSSAI and GST Network should be taxed, the GoM has suggested to the Council.

It has proposed levy of 12 per cent GST on goods related to petroleum/coal bed methane and raising of tax on renewables equipment to 12 per cent.