5% GST on all pre-packed, labelled food items and hospital rooms costing more over ₹5,000 from Monday

The GST Council’s decision will take effect on Monday and require customers to pay 5% GST on pre-packaged, labelled foods including atta, paneer, and curd as well as hospital rooms with rent exceeding ₹5,000.

Additionally, a 12 percent Goods and Services Tax (GST) will be applied to hotel rooms costing up to ₹1,000 per day, maps, charts, and atlases, while an 18 percent GST will be applied to tetra packs and fees charged by banks for the issuance of checks (loose or in book form).

The GST Council, presided over by Union Finance Minister Nirmala Sitharaman and made up of her state equivalents, had last month reduced the exemption list and imposed tax on a variety of goods and services.

Based on an interim rate rationalisation report from the Group of Ministers (GoM), the Council also eliminated duty inversion for products where input taxes were higher than output taxes.

To remedy the inverted duty anomaly, tax rates on items including printing, writing, or drawing ink; knives with cutting blades, paper knives, and pencil sharpeners; LED lamps; and drawing and marking out tools will be raised to 18% on Monday from the present rate of 12%.

Additionally, the GST rate on solar water heaters has increased from 5% to 12%.

The tax rate for some services, including work contracts for roads, bridges, trains, metro, effluent treatment facilities, and crematoriums, will increase from the present 12% to 18%.

In addition, from July 18 onward, taxes on ostomy appliances and on the transportation of goods and persons by ropeways will be reduced from 12% to 5%.

Renting a truck or goods carriage that includes fuel costs will now be charged at a cheaper rate of 12% as opposed to 18%.

Only travellers travelling in economy class will be free from GST when travelling by flight to and from northeastern states and Bagdogra.

Renting a residential property to businesses will also be subject to an 18% tax on services provided by authorities like the RBI, IRDA, and SEBI.

In contrast, non-ICU hospital rooms above ₹5,000 per day would be assessed 5% GST, without an input tax credit, up to the amount charged for the room. Bio-medical waste treatment facilities will be subject to a 12% GST.

Additionally, persons can only use the GST exemption for coaching or training in leisurely activities related to the arts, culture, or sports.

Additionally, starting on July 18, electric vehicles, whether or not equipped with a battery pack, will be eligible for the discounted GST rate of 5%.

According to a senior partner at AMRG & Associates, clinical establishments have long been exempt from taxes when providing healthcare services.

All of these clinical facilities, including hospitals, nursing homes, and sanatoriums, have now been informed by the government that they will be required to pay tax on gross room rentals that exceed ₹5,000 per day.

In addition, starting on July 18, electric vehicles, whether or not equipped with a battery pack, will be qualified for the 5 percent concessionary GST rate.

According to Rajat Mohan, senior partner of AMRG & Associates, a clinical establishment’s healthcare services have been exempt from taxes under Indian tax regulations for many years.

The government has now announced that all of these clinical facilities, such as hospitals, nursing homes, and sanatoriums, will be required to pay tax on gross room rentals that exceed ₹5,000 a day.

“The startling question that arises in relation to the amendment is that since the medical facilities’ treatment is a composite supply, separate components of the referred transaction cannot be intentionally vivisected for the purpose of imposing new tax obligations. The section of section 8 that requires a single tax on all composite supply transactions appears to be supra vires and is the basis for the notification.” Mr. Mohan added.