Pre-packed food items, hospital rooms above Rs 5K require GST from Monday

NEW DELHI: With the GST Council's decision coming into effect, consumers will have to pay 5 per cent GST on pre-packaged and labelled food items like atta, paneer, and curd, apart from hospital rooms with rent above Rs 5,000 from Monday.

Also, there will be a 12 per cent GST for hotel rooms with a tariff of up to Rs 1,000 per day, including maps and charts and atlases, while 18 per cent GST will be levied on tetra packs and fees that banks charge for issuing checks (in loose or book form).

Chaired by Union Finance Minister Nirmala Sitharaman, the GST Council comprising of the minister and state counterparts had trimmed the list of exemptions and levied a tax on a number of goods and services.

Based on the Interim Report of the Group of Ministers (GoM) on Rate Rationalization, the Council had also removed duty inversion for goods having higher tax inputs than output.

Tax rates on products such as printing, writing or drawing ink; cutting blades, paper knives, pencil sharpeners; LED lights; drawing and marking equipment will be raised from 12 per cent to 18 per cent on Monday to address the inverted tax anomaly.

Also, solar water heaters will attract 12 per cent GST as against the previous 5 per cent.

Tax on certain services, such as labour contracts for roads, bridges, railways, metros, sewage treatment plants and crematoriums, will also rise from the current 12 per cent to 18 per cent.

Also, the tax on ostomy appliances and transportation of goods and passengers by ropeway will be reduced from 12 per cent to 5 per cent from July 18.

Rental of trucks and wagons, which includes fuel costs, will be reduced to 12 per cent from 18 per cent now.

GST exemption for air passenger transport to North Eastern states and Bagdogra will be limited to economy class only.

The services provided by regulators like RBI, IRDA and SEBI will be taxed at 18 per cent along with renting of a residential dwelling to business entities.

Bio-medical waste management facilities will be subject to 12 per cent GST, while non-ICU hospital rooms costing more than Rs 5,000 will be charged 5 per cent GST without the input tax credit, up to the amount charged per room.

Also, individuals can claim GST exemption only for training or practice in recreational activities related to arts, culture or sports.

Electric vehicles, whether fitted with a battery pack or not, are eligible for a concessional 5 per cent GST rate from July 18.

Rajat Mohan, Associates senior partner, AMRG, said that healthcare services of a clinical entity have enjoyed tax-neutral status under Indian tax laws for decades.

Now, the government has announced that all clinical establishments, including hospitals, nursing homes and sanatoriums, will have to pay tax on gross room rent exceeding Rs 5,000 per day.

"The striking question which comes to mind regarding the amendment is that since the treatment provided by the medical establishments is a composite supply, different elements of the referred transaction cannot be vivisected artificially for imposing new tax liabilities. Underlying notification seems to be ultra vires the provision of section 8 that mandates a single tax on all composite supply transactions," Mohan added.

Source -PTI