Tax officials of the central and state governments will this week hold their maiden meeting on devising a formula for tax rate to be levied on services under the Goods and Services Tax (GST) regime from July 1.
While the GST Council had previously decided on a four- tier rate structure of 5, 12, 18 and 28%, its fitment committee will hold its first meeting this week on slotting different services in one of the slabs, a senior official told PTI. The task before the panel is to keep the impact of GST on inflation and prices near neutral or zero.
The fitment committee is likely to hold more meetings before GST Council's meeting on May 18-19 where tax rates for different products and services are to be finalised so as to enable roll out of the biggest tax reform from July 1. "The fitment committee will start with deciding on tax rates on services. Since the Centre alone has the power to levy service tax under the current regime, fixing of the tax rate on services would be an easier task," the official said.
The official said that most of the services where both VAT and service tax were levied would be fit around the standard rate of 18%, while those on which only 12.5% VAT was levied would be brought to 12%.