Goods and Services Tax (GST) Council has decided to give relief to the transport sector by way of a reduction in the tax rate at its two-day meeting which concluded in here on Wednesday, said a person aware of the development.
Transport of goods and passengers by all major modes of transport attracts GST at the rate of 5% with credit for input services. Ropeways are an important component of passenger and goods transport in the hilly and remote areas and therefore, the GST Council has recommended that GST on transport of goods and passengers by ropeways be reduced from 18% to 5% with credit for input services, the person said.
Renting of motor vehicles with operator where the cost of fuel is included in the price attracts GST at the lower rates of 5% without tax credit or 12% with tax credit. It has been recommended that on the same lines, GST on renting of goods carriage with operator where the cost of fuel is included in the price be reduced from 18% to 12%. The reason for lower rates on transport of goods and passengers is that petrol, diesel, jet fuel etc. are outside GST.
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Transport of goods by road attracts 5% GST without tax credit or 12% with tax credit. Currently, goods transport agencies who opt to pay 12% GST do not have the option to pay GST at the rate of 5%. They have to pay GST at the rate of 12% on all their consignments under forward charge. Goods transport agencies will now be allowed to pay GST either at 5% or 12% on their consignments under forward charge. The option to continue under reverse charge mechanism at 5% rate will also continue. Goods transport agencies will be able to switch from one option to the other at the beginning of the financial year.
Currently, in case of tours conducted partially in India and partially outside India such as Nepal, Bhutan etc., GST has to be paid on the price charged for the entire tour. The Council has recommended that in such cases, proportionate value of the foreign component of the tour may be exempted from GST when provided to a foreign tourist.
An email sent to the finance ministry and to GST Council on Wednesday seeking comments for the story remained unanswered.
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