Why? A criterion can help decide the implementation of the tax rate. This differentiation is vital to the services industry because services like IT, accounting, etc., are used by a varied customer base.
What if I have a property, should I think about GST?
If you have just bought a ready-to-move-in property, probably not because buyers of such units are not liable to pay any indirect tax. If you have bought a property, which is under-construction, you pay VAT and service tax. While VAT is a state levy and its rate differs from one state to another, service tax is a central tax. GST then will be applicable here.
The Centre will levy GST on all rental income but is unlikely to impose the tax on individuals renting out homes. Currently, service tax is levied on rental income from commercial property, but not levied on residential property.
You may not like this if you are a working professional...
GST would be payable if there is a supply of free goods or services to an employee exceeding the stipulated sum — the CTC. If an employee avails of a company asset for personal use (say a car), it would trigger GST. The final bill also includes a list of services for which input tax credit will not be available. Some of these are facilities extended to employees such as free or subsidised food and beverages at the workplace, sponsorship of club or fitness centres membership, cab facilities, group life and health insurance.
There's a cause of concern for companies too
Clause 171(1) of the GST Bill provides that any reduction in rate of tax on any supply of goods or services, or the benefit of input tax credit shall be passed on to the recipient (consumer) by way of a commensurate reduction in prices. This puts companies under far greater scrutiny, say experts. Apart from that, fixing the input tax credit will be tougher in case of multi-product companies or in case of bundled sales.
Big impact on small firms
Clause 9(4) of the GST Bill provides that if a supplier is not registered, and there is a sale to a registered entity (say, a company), then the buyer shall bear the GST on such sale under what is technically referred to as a reverse charge mechanism. Companies procure goods from smaller players who may be outside the GST ambit. Given the hassles involved when purchases are made from unregistered sellers, its likely that the business of the smaller players will be hit.
News Source - The Economic Times