Tweaks may raise GST on water pumps, room rents in hospitals

The tax burden could increase for items such as water pumps, dairy machinery, leather products and solar water pumps, and for services such as hospital rooms with a rent above that 5,000 per day and hotel accommodation cheaper than 1,000 a night if proposals from a ministerial panel at this week’s Goods and Services Tax Council meeting are settled.

In addition, tax exemptions for certain business-to-business transactions are likely to be scrapped if recommendations from a committee headed by Basavaraj Bommai, Karnataka’s chief minister, are approved.

The committee has recommended cutting tax exemptions and correcting certain tax anomalies, including charging a 12% GST on lower priced hotel accommodations 1,000 per night and charging 5% GST on hospital rooms if rent is above that 5,000 a day. The removal of the tax exemption for budget hotel accommodation is proposed, as there is no GST registration requirement for small businesses with a turnover of up to 20 lakhs. The idea of ​​removing the tax exemption for hospital room rentals above the set price threshold is that the customer base for such services is the financially affluent, according to official documents viewed by Mint.

Proposals, which form part of an interim report by the committee, include raising the GST rate from 12% to 18% for items such as printing, writing and drawing ink, certain knives, spoons and tableware, dairy machinery, LED lamps and drawing instruments . A tax rate increase from 5% to 12% is proposed for solar water heaters and finished leather. Also, tax refunds claimed due to tax anomalies in certain cases, e.g. B. with cooking oils, can be refused. An increase in the GST rate from 5% to 12% and from 12% to 18% for certain outsourced work is also expected.

The revocation of tax exemptions for certain business-to-business transactions – for example, non-economy class air travel to the Northeast and Bagdogra and goods transport services by rail or road – is also recommended. In such transactions, companies receive credits for the taxes paid anyway. An email sent to the Treasury Department and GST Council on Sunday seeking comments on the story had gone unanswered at press time.

The GST Council is also likely to clarify the tax regime for casinos, online gaming and racecourses, specifying the transaction value to which a proposed 28% GST would apply, bringing much-needed certainty about taxation in these sectors.

A second group of ministers led by Meghalaya Prime Minister Conrad Sangma has recommended that a 28% GST should be levied on the entry fee and the value of chips or coins purchased at a casino, but not on the individual bets placed by the player. For online gambling, the proposal would apply a rate of 28% on the full value of the consideration paid by the player to participate. The panel has recommended that a 28% GST should be levied on casinos, online games and racecourses, regardless of whether the game is a game of skill or chance or both. Industry players have paid 18% GST in many cases, backed by court orders.

The panel also suggested that once GST is levied on the purchase of coins or chips in casinos, no further GST should be levied on the value of bets placed in each betting round.

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