14th Meeting of GST council which concluded on 19.05.2017 at Srinagar had laid down the rates of tax under GST. As per the document uploaded on CBEC website there shall be five rates of tax for goods and services. Such rates are 0%, 5%, 12%, 18% and 28%. For the goods maximum rate has been kept at 28% whereas for services maximum rate is 18%. GST is expected to be rolled out from 01.07.2017 and henceforth where the supply of goods and/or services within Chandigarh by a taxpayer registered in Chandigarh shall attract Center GST and UT GST. Where the taxpayer registered in Chandigarh sells goods outside the city, Integrated Goods and Services Tax shall be charged. With government all set to roll out GST, the new tax regime is going to far reaching impact on Chandigarh:
- Increase in Tax Revenue: Before GST, Chandigarh Administration dint had any powers to levy tax on the huge service sector established in Chandigarh. With most of services being charged at the rate of 18%, Chandigarh is going to collect 9% tax on the services which are rendered in the city beautiful. All the professionals and service providers like Chartered Accountants, IT Companies etc. which were earlier out of ambit of Chandigarh administration, shall after GST come under their tax net.
- Impact on Real Estate: With idea of warehouses and distributorship being dropped by companies, it is expected that most of the commercial properties are going to get vacated. This would result in fall in rental value of commercial properties in Chandigarh.
- Impact on Start Up – With the rental value getting cheaper and presence of Special Economic Zone in Chandigarh, new business and start-ups will be encouraged to commence business here. This will lead to generation of employment for youth in the tri-city.
- Impact on Service Sector – With service tax rate increased from 15% to 18%, the service sector will become costly for a common man. Service sector has a huge share of Chandigarh’s economy. The common man has to pay more for receiving beauty parlor services, personalized services etc. With services becoming costly the food at luxury hotels and other luxury services like spa and sauna will become heavy on the pocket of the taxpayer. These issues might prove inflationary for the residents of Chandigarh.
- Own Law and Dual Control: For the first time, union territory will have its own law without any intervention from Punjab and Haryana Government. Decisions regarding the tax structure shall be taken by centre through GST Council. The taxpayer shall now be controlled by both Chandigarh Administration and Central Excise and Service Tax Authorities.