Tax incidence on entertainment services under GST lowered

Terrell Bush
May 24, 2017

The Ministry said, there will be lesser tax burden in case of Medicaments, including Ayurvedic, Unani, Siddha and Homeopathic. These items now attract more than 13% tax, including a 6% central excise duty and a 5% VAT. In addition, companies pay central sales tax, octroi and entry tax, among others. As against this, the proposed GST rate on medicines, including ayurvedic medicines, is 12%.

Smart phone attracts two percent central excise duty [one percent excise duty + one percent NCCD]. The present tax incidence on them works out to more than 13%, which is higher than the proposed 12% GST rate.

Tax incidence on entertainment services will attract up to 28 per cent GST with effect from July 1.

Highlighting the positives of the new tax policy Goyal said that the GST is "Self-Regulatory" and it is not possible for someone to evade taxes under the new tax regime. In general, they attract 6% central excise duty and 5% Value-Added Tax. As against this, the proposed rate under GST is 12 percent.

Worship materials including that required for "havan" will be under the nil category. "However, exact formulation for the same is yet to be finalised", the finance ministry said in a statement late on Monday.

Earlier, the finance ministry had announced that all the entertainment activities, which involves use of premises, including movie theatres will be kept Inder 28% of GST slab.

Further, the council has approved an exemption upto a consideration for admission of Rs 250 per person. These services now attract entertainment tax levied by the states. However, the rates may stabilize as taxes levied by states are subsumed in GST.

A smart phone now attracts 2 per cent central excise duty and Value-Added Tax, which vary from state to state (5 per cent to 15 per cent). The government, however, says that the incidence of tax will come down due to input tax credit for goods being made available to service providers.

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