The Services Sector has been significantly impacted by the latest GST revisions. The government’s decision to revise rates across various service categories—from works contracts to hotel accommodation, transport services, insurance, job work, and entertainment—is aimed at easing compliance, encouraging growth, and reducing costs for businesses and consumers alike.
Services Sector
| S.No. | HSN Code | Description of Service | From | To | |||||||||||||||||||||||||||||||||||||||||||||
| 1. | 9954 | (i) Composite supply of works contract services involving predominantly earth work (that is constituting more than 75 percent of the value of the works contract) provided to Government |
12% with ITC | 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| (ii) Composite supply of works contract provided by a sub- contractor to the main contractor providing services at (i) above to Government |
12% with ITC | 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| (iii) Composite supply of works contract and associated services, in respect of offshore works contract relating to oil and gas exploration and production in offshore area |
12% with ITC | 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| 2. | 9963 | Supply of “hotel accommodation” having value of supply of a unit of accommodation less than or equal to seven thousand five hundred rupees per unit per day or equivalent |
12% with ITC | 5% without ITC | |||||||||||||||||||||||||||||||||||||||||||||
| 3. | 9964 | (i) Supply of Air transport of passengers in other than economy class |
12% with ITC | 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| (ii) Supply of Passenger transport by any motor vehicle where fuel cost is included | 5% with ITC of input services (in the same line of business) |
5% with ITC of input services (in the same line of business) |
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| 12% with ITC | 18% with ITC | ||||||||||||||||||||||||||||||||||||||||||||||||
| 4. | 9965 | (i) Supply of Transport of goods by GTA | 5% without ITC (RCM/FCM) |
5% without ITC (RCM/FCM) |
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| 12% with ITC | 18% with ITC | ||||||||||||||||||||||||||||||||||||||||||||||||
| (ii) Supply of transport of goods in containers by rail by any |
12% with ITC | 5% without ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||||
| person other than Indian Railways |
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| (iii) Supply of transportation of natural gas, petroleum crude, motor spirit, high speed diesel or ATF through pipeline |
5% without ITC | 5% without ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| 12% with ITC | 18% with ITC | ||||||||||||||||||||||||||||||||||||||||||||||||
| (iv) Supply of Multimodal transport of goods within India | 12% with ITC | 5%, where no leg of transport is through air, with restricted ITC (i.e. 5% of input services of goods transportation). |
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| 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||||
| 5. | 9966 | (i) Supply of Renting of any motor vehicle (with operator) designed to carry passengers where the cost of fuel is included in consideration | 5% with ITC of input services (in the same line of business) |
5% with ITC of input services (in the same line of business) |
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| 12% with ITC | 18% with ITC | ||||||||||||||||||||||||||||||||||||||||||||||||
| (ii) Supply of Renting of goods carriage (with operator) where fuel cost is included in consideration | 12% with ITC | 5% with ITC of input services (in the same line of business) |
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| 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||||
| 6. | 9968 | (i) Local delivery services (This service is currently taxed at the rate of 18% with ITC as this is covered under SAC 996813 – under the Group Postal and Courier Services) |
18% with ITC | 18% with ITC (no change) | |||||||||||||||||||||||||||||||||||||||||||||
| (ii) Supply of local delivery services through Electronic Commerce Operator (ECO) | Not currently notified under section 9(5) of the CGST Act | · Local delivery services to be notified under section 9(5) of the CGST Act in cases where the person supplying |
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| such services through electronic commerce operator is not liable for registration under GST · The applicable rate on such services to be 18%. · Local delivery services provided by and through ECO to be excluded from the scope of GTA services. |
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| 7. | 9971 | Supply of Service of third-party insurance of “goods carriage” |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| 8. | 9973 | Leasing or rental services, without operator, of goods which will attract (28%) 40% GST |
28% With ITC | 40% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| 9. | 9983 | Other professional, technical and business services relating to exploration, mining or drilling of petroleum crude or natural gas or both; |
12% with ITC | 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| 10. | 9986 | Support services to exploration, mining or drilling of petroleum crude or natural gas or both. |
12% with ITC | 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| 11. | 9988 | (i) Supply of services by way of job work in relation to umbrella |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| (ii) Supply of job work services or any treatment or process in |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| relation to printing of all goods falling under Chapter 48 or 49, which attract GST @12% 5% |
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| (iii) Supply of job work in relation to bricks which attract GST at the rate of 5% |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| (iv) Supply of job-work services in relation goods falling under Chapter 30 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975) (pharmaceutical products) |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| (v) Supply of job-work services in relation to Hides, skins and leather falling under Chapter 41 in the First Schedule to the Customs Tariff Act, 1975 |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| (vi) Supply of job-work not elsewhere covered (residual entry) |
12% with ITC | 18% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| 12. | 9994 | (i) Services by way of treatment of effluents by a Common Effluent Treatment Plant; |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| (ii) Services by way of treatment or disposal of biomedical waste or the processes incidental thereto by a common bio- medical waste treatment facility to a clinical establishment. |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| 13. | 9996 | (i) Services by way of admission to exhibition of cinematograph films where price of admission ticket is one hundred rupees or less. |
12% with ITC | 5% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
| (ii) Admission to casinos, race clubs, any place having casinos or race clubs, or sporting events like the IPL. |
28% With ITC | 40% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| (iii) Services by a race club for licensing of bookmakers in such club. |
28% With ITC | 40% with ITC | |||||||||||||||||||||||||||||||||||||||||||||||
| 14. | 9997 | Beauty and physical well-being services falling under group 99972 [This service is currently taxed at the rate of 18% with ITC as this is covered under SAC 9997] |
18% with ITC | 5% without ITC | |||||||||||||||||||||||||||||||||||||||||||||
| 15. | Any chapter | Specified Actionable Claims (betting, casinos, gambling, horse racing, lottery, online money gaming) defined as goods (Corresponding changes in the lottery valuation rules are also being carried out) |
28% With ITC | 40% with ITC | |||||||||||||||||||||||||||||||||||||||||||||
A. Services Proposed to be exempted
| S.No. | HSN Code | Description of Service | From | To | ||||||||||||||||||||||||||||||||||||||||||
| 1 | 9971 | (i) All individual health insurance, along with reinsurance thereof |
18% with ITC | Exemption | ||||||||||||||||||||||||||||||||||||||||||
| (ii) All individual life insurance, along with reinsurance thereof |
18% with ITC |
Exemption |
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Impact on various sectors:
- Businesses: Need to reassess pricing strategies while optimizing for ITC benefits where applicable.
- Consumers: Enjoy tax relief in hospitality, entertainment, healthcare, and personal care services.
- Governance: Promotes regulated sectors while supporting essential services and sustainable practices.
FAQs
1.What are the recent GST rate changes for hotel accommodation services?
The GST rate for hotel accommodation services has been reduced from 12% to 5% for rooms costing ₹7,500 or less per day. This change aims to make hotel stays more affordable and encourage domestic tourism.
2. How does the GST revision impact works contract services for government projects?
The GST rate on works contract services for government projects has increased from 12% to 18%, with input tax credit (ITC) available. While costs may rise, businesses can claim credit on eligible inputs, reducing the effective tax burden.
3. Is there any GST relief for waste treatment and biomedical disposal services?
Yes! Services like effluent treatment and biomedical waste disposal now attract a reduced GST rate of 5% with ITC, down from 12%. This helps promote sustainable waste management and reduces operational costs for healthcare providers.
4. What changes have been made in the GST rates for passenger transport services?
Passenger transport by air (other than economy class) and motor vehicles where fuel is included now attract 18% GST with ITC, up from 12%. However, certain categories like local transport may still benefit from concessional rates.
5. Are beauty and personal well-being services taxed differently now?
Yes. Beauty and physical well-being services are now taxed at 5% without ITC, down from 18%. This makes wellness treatments more accessible to consumers.
6. How are insurance services affected by the new GST rates?
All individual health and life insurance services, along with reinsurance, are now fully exempt from GST, helping individuals better plan for their long-term financial and medical security.
7. What GST changes affect gambling and online gaming services?
Services such as casinos, horse racing, online gaming, and betting now face a higher GST rate of 40% with ITC, up from 28%. This is aimed at regulating high-risk entertainment sectors.
8. What is the impact of GST changes on transport of goods by rail and road?
GST rates for goods transport services have been revised, with most categories increased from 12% to 18% with ITC, while some specific services like pipeline transport remain at 5% without ITC. Businesses need to review logistics pricing structures accordingly.
9. Can businesses still claim input tax credit after the new GST revisions?
Yes, in most cases where the rate increased (like works contracts and passenger transport), input tax credit is allowed, helping businesses manage costs despite higher tax rates.
10. Where can I find official details about these GST rate changes?
For complete information on GST rate revisions and official notifications, visit the Central Board of Indirect Taxes and Customs (CBIC) at https://www.cbic.gov.in/
