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बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. A two tax slabs for services: Comment on the proposal of taxing services based on two different slabs.
May 01, 2017 Related to : GS Paper-3

Ans :

Introduction-

The Goods and Services tax (GST), which will subsume central excise, service tax, Value Added Tax (VAT) and other local levies, is scheduled to be rolled out from July 1. It has been reported that, the central and state governments wants to have the tax rate on services under the new GST regime under two slabs. Tax rates on services likely to limit at 12 and 18%. 

Analysis-

  • The new proposal of taxing services under two slabs looks pragmatic. Until now, all services were taxed uniformly at the rate of 15% except for seventeen services that were on the exempt list. 
  • Now, the GST Council is examining the proposal of two slabs and its fitment committee is deciding whether taxing all services at 18% is better than using two distinct slabs for services at 12% and 18%.
  • Taxing on services using two different slabs will reduce the prices of some basic services while increasing it for other luxury services, thus creating a balance for the sector. 
  • A uniform GST at 18% will significantly increase the prices of all services including the basic services and might affect the service sector negatively. Hence in this background taxing services on two different slabs makes more sense.

Conclusion-

The central and state governments’ wants to tax on services based on two different slabs. The GST council is examining the proposal of two slabs services. Taxing on different slabs based on nature of services makes sense. As it reduces the prices of basic services and increases that of luxury service. It helps creating balance in service sector, hence will be pragmatic move considering the India progressive taxation structure. 


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