Mumbai: Domestic ratings agency Crisil today said it will take six months for industrial stabilisation after GST is introduced but gains of the biggest indirect tax reform will take up to 3 years to materialise.
It seems that 81 percent of the items are under 18 percent GST while only the luxury items are at a high tax of 28 percent.
Education and healthcare sectors have been exempted from the GST regime whereas the Telecom and financial services will continue to be taxed at the standard rate of 18 percent.
"The initial reaction is of great despair.28 per cent would be the end of the industry, "Federation of Hotels and Restaurants Associations of India (FHRAI) Vice President Garish Oberoi said in a statement". Talking to reporters after the meeting, Finance Minister Arun Jaitley said, "Tax rates for many items have been reduced". Similarly, restaurants will also charge 18 per cent tax instead of 22 per cent.
The release of the tax rates in the public domain has happened 40 days before July 1, the day the GST regime kicks in.
Five-star restaurants to attract tax up to more 28 per cent.
The telecom industry on Friday expressed disappointment over the 18 per cent Goods and Services Tax (GST) rate, saying it will further stress the already-bleeding balance sheet of the sector. The service tax rate now stands at 15 percent.
Preliminary analysis show that a hosuehold now spending Rs 74,350 per month will see a saving of Rs 2000 per month from July 1, 2017 as GST comes into force.
Several analysts have opined that consumers may have to bear the brunt of the higher tax. Earlier, some industry players had demanded gold be put under lowest tax bracket of 5 per cent.
Jaitley said that while the overall basket of taxes will see a reduction, he hoped for greater tax buoyancy because of greater efficiency and less tax evasion.
Net effect of GST implantation won't be inflationary. All cars, buses, trucks and motorcycles including moped as well as personal aircraft and luxury yachts will attract a peak Goods and Services Tax of 28 per cent. It is exempted from tax now.