Skip to main content

Impact of GST on Service Sector of India

In an earlier blog we discuss the manufacturing sector, and how it's performing under GST now in this blog, we will talk about the Service sector.
As we discuss earlier service sector is contributing almost 50% of GDP nowadays, and it's been the most successful sector after LPG and its been predicting that it will continue to rise shortly.
Indirect taxes have always been contributing more than direct fees to Govt. revenue. Service solely added a significant contribution in charge also.
Service sector not only dominate in GDP but also attracts foreign investment in the economy, Service sector also provided a significant amount of employment in the country.
The GST council has decided in its 22nd meeting that presently, anyone making inter-state taxable supplies except inter-state job worker is compulsorily required to register irrespective of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 Lakh ( Rs. 10 Lakh in particular category states except for J&K ) from obtaining registration even if they are making inter-state taxable supplies of service. This measure is expected to significantly reduce the compliance cost of small service providers.
A GST council has changed the rates on services in a 22nd meeting held on 6th October 2017 which include changes in the function below.
for understanding following decisions are taken bu GST Council under Chairmanship of Union Finance Minister Shri Arun Jaitley on 6th Oct. GST rates on job work service is being rationalized as follows



S. No.
Description of Service
Rate
1
Job work services about all products falling in Chapter 71 (including imitation jewelry)
5%
2
Job work service about food and food products falling under Chapters 1 to 22 of the HS code ( except packing of processed milk into packets )
5%
3
Job work service about products falling under Chapters 23 of the HS code except dog and cat food put up for retail sale 
5%
4
Job work about the manufacture of umbrella
12%
5
Job work about the production of clay bricks falling under
5%
6
Service by way of printing on job work basis or on goods belonging to others about the printing of all products falling under chapter 48 or 49
5%
7
Service by way of printing on job work basis or on goods belonging to others about the printing of all goods falling under chapter 48 or 49
12%
8
Service by way of printing on job work basis or on assets belonging to others about the printing of all products falling under chapter 48 or 49 other than those which cover under 6 & 7
18%
9
Service by way of printing on job work basis or on goods belonging to others about the printing of all products falling under chapter 48 or 49 which attract GST 5% or nil, the paper used for  printing belong to printer
12%
10
Service by way of printing on job work basis or on goods belonging to others about page of all products falling under chapter 48 or 49 which attract GST 12 %, the paper used for  printing belong to printer
12%
11
Service by way of printing on job work basis or on goods belonging to others about the page of all products falling under chapter 48 or 49 which attract GST 18% paper used for  printing belong to printer
18%
12
To issue a clarification about the classification of printing products







In the previous tax regime, service tax was applicable at the rate of 15% on service rendered which include 0.5% for swatch Bharat cess and 0.5% for Krishi Kalyan cess.
It has been extended at 18% doing the service and works contracts costlier.
Revenue sector also mentioned the level of taxation has been increased in the last GST structure


 In the previous tax system both central and state govt. had right to collect the tax according to their rights but with the introduction of GST regime, the double taxation effects due to disputed goods and service in the previous tax system have been eliminated



 Conclusion :- 
                       GST is a bit complicated for small business as there are a different type of services charge at different rates as we saw earlier in chart, as every coin has two sides it will be more clear for people as well as business in near future, in early stages business and people will suffer problems related to it. Soon as the GST and new tax rate will get regulated in the market, it will become easy to deal with it than now.
Labels:
Location: Mumbai, Maharashtra, India

Comments

Post a Comment

Popular posts from this blog

Boeing 737 Max Crash How badly it is going to affect Boeing

The world was in a shock when it heard about a Boeing 737 Max had crashed in Ethiopia, and this crash killed 157 people. After this crash, some strong steps had taken by many countries, but the question arises, how much this will hit badly to Boeing. In this blog, we will see how economical it will affect Boeing.   Boeing 737 Max is a relatively new plane introduced in August 2011, and it performed its first flight in January 2016. It is a fourth generation aircraft which cost from $99.7 million to $134.9 million for a unit. They consider this plane a modern plane. It is not the first time that a plane has crashed and people died if but it is rare that an aircraft manufacturing company is to be directly blamed for the accident. Here, Boeing is in the fault because of the same model Boeing 737 Max 8 has crashed twice in five months killing all approx. Three hundred forty-six people on board and the pattern was similar in both planes as both crashed within 15 minutes of take-off.
1 comment
Read more

why is the Australian economy slowing down

why is the Australian economy slowing down                                 A ustralian economy possesses the crown for the economy with no recession from past years. Australia is considering land with no depression. The Australian economy has recorded an uninterrupted growth from the last 27 years. The economy of Australia has even successfully overcome from the recession of 2008.  Many strong developed and underdeveloped economies have affected, but the Australian economy has held his ground in an adverse situation, and this is the dream of many economies. Australian Dollar has also shown stability in past years.  When you look at the Australian economy, it doesn't have a large economy like the USA or export-oriented economy like China, etc. which can help to have sustainable growth. When you look at the Australian economy it doesn't have any particular sector or factor which is responsible for this growth, but we have to appreciate Australian economist and lawmak
3 comments
Read more

How is India proliferating its Foreign Exchange Reserve?

How is India proliferating its Foreign Exchange Reserve?     M oney is at the core of every economic activity in the world. Governments need cash to run daily activities. Authorities usually raise funds either by capital gain or revenue gains, i.e. by selling goods and services or taking out loans. Nations usually hesitate to acquire loans as countries have to pay interest etc. And only apply for the loan for a longer period. New Delhi uses  Indian foreign exchange reserves  (made up of Indian foreign exchange or  Indian foreign exchange markets) to tackle short term needs. Thus, most of the Govt. Tries to use funds from revenue gains, but in the current coronavirus, crisis authorities are not having an adequate amount of reserves thus nations are now turning their attention to their foreign exchange reserves to counter its requirement. Thus, eventually, countries’ foreign exchange reserves are plummeting rapidly. The Kingdom of Saudi Arabia, Republic of China (Taiwan) and Hong Kong
1 comment
Read more