GST Rates – Services

| Updated on: August 24, 2021
  • 4 Tier Structure : GST Rates – Services
  • Categorization Of GST Rates For Services Under The 4 Tier Model
  • GST rate schedule for services
    • GST rate on works contract services
    • GST rate on consultancy services
    • GST rate on professional services
    • GST rate on courier services
    • GST rate for professional services
    • GST rate for IT services
  • GST on loans and advances

4 Tier Structure: GST Rates – Services

GST council also imposed GST on Services with the same 4 - tier tax structure as of goods. GST rates on services comprising of 5%, 12%, 18% and 28% come with various pros and cons for the consumers.

However, government has exempted healthcare and educational services from the purview of the GST.

Categorization Of GST Rates For Services Under The 4 Tier Model

The Goods and Services Tax council has passed the rate slabs at NIL, 5%, 12%, 18%, 28%. Some of the services categorized under different slabs are mentioned below :

Tier – I  (5% Tax Slab) :
  • Railways-Transportation of goods, passengers
  • Goods transported in a vessel from outside India
  • Renting a motor cab without fuel cost
  • Transport services in AC contract/stage or radio taxi
  • Transport by air
  • Tour operator services
  • Leasing of aircrafts
  • Working for printing of newspapers
Tier – II (12% Tax Slab) :
  • Rail transportation of goods in containers from a third party other than Indian Railways
  • Air travel excluding economy
  • Food /drinks at restaurants without AC/heating or liquor license
  • Renting of accommodation for more than Rs.1000 and less than Rs.2500 per day
  • Chit fund services by foremen
  • Tour operator services
  • Leasing of aircrafts
  • Construction of building for the purpose of sale
  • Intellectual Property rights on a temporary basis
Tier – III ( 18% Tax Slab) :
  • Food/drinks at restaurants with liquor license
  • Food /drinks at restaurants with AC/heating
  • Outdoor catering
  • Renting for accommodation for more than Rs.2500 but less than Rs.5000 per day
  • Supply of food, shamiyana, and party arrangement
  • Circus, Indian classical, folk, theatre, drama
  • Supply of works contract
  • Movie Tickets over Rs. 100
  • Hotel accommodation for transaction value per unit per day being with Rs 2,500-7,500 tariff 
Tier – IV (28% Tax Slab) :
  • Entertainment events-amusement facility, water parks, films, theme parks, joy rides, merry-go-round, race course, go-carting, casinos, ballet, sporting events like IPL
  • Race club services
  • Gambling
  • Food/drinks at AC 5-star hotels
  • Accommodation in 5-star hotels or above
  • Hotel accommodation for transaction value per unit per day being Rs. 7501 or more

GST rate schedule for services

  • GST rate on works contract services: First of all one needs to understand whether works contract is a service or not. In GST, composite supply of works contract has been classified as a service.

    Accordingly, the rate of GST on services, in this case, would be as follows :

    • 12% - Construction of a complex, building, civil structure or a part thereof, intended for sale to a buyer, wholly or partly. [The value of land is included in the amount charged from the service recipient]
    • 18% - Other works Contract

    Clarifications : If works contract is executed in construction of complex or building where the intention is to sale to a buyer then rate of tax will be 12% else 18%.

  • GST rate on consultancy services : Consultancy services attracts 18% of GST Rate. Consultancy can be of any nature related to healthcare, finance, investments etc. Though there are five slab rates, but consultancy services falls under 18% slab only.

    Other GST slabs are 0%, 5%, 12%, 18% and 28%. These slabs are assigned on the basis of basic necessity and economic activity.

    All those services which were attracting Service Tax at the rate of 15% now falls under the slab of 18% under GST regime.

  • GST rate on professional services :
    Nature of services GST rate for services
    Services provided by legal professionals i.e. advocates – [Service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.] 18% Slab
    Services provided by chartered accountants, company secretaries and cost accountants [Services in nature of accounting, auditing, bookkeeping, tax return preparation and filing, consultancy and representational services.]
    Services provided by doctors and dentists [Services for appearance enhancement i.e. hair transplant, cosmetic and plastic surgeries are liable to be taxed and only these services are included and all other services provided by doctors and dentist are covered under health care services and are exempt from GST levy]
    Services provided by architects and interior decorators/ designers [ Services of nature Interior decoration/ design service]
    Services provided engineers
    Teachers [Profession includes vocation. So any services provided by private teachers/ tutors who conduct coaching classes or run coaching centers are covered under professional services and the services they render to students can be termed as education services liable to be taxed]
    Designers (fashion, industrial and specialty)
    Film artists
  • GST rate on courier services : Courier services includes transportation, collection and delivery services. This includes letters , parcels etc movement form one or model of transportation.

    However GST on Postal services is excluded. GST on courier services is applicable as it falls under the definition of Supply.

    Below is the GST rate on courier services :

    Nature of Service GST rates on services
    Courier Services        18% Slab
  • GST rate for educational services : Though blindly any services provided by an educational institution is exempted from levy of taxes, there are certain services which when provided or consumed by educational institutions are liable to be taxed.

    Below is the GST rate for educational services which are taxable under GST :

    Nature of Service GST rates on services
    Training services provided by commercial coaching entities   18% Slab
    Educational events organised by a foreign-based entity in India and the service recipient being commerce, industry or any other business or profession.
  • GST rate for IT services
    Nature of Service GST rates on services
     Information Technology Services :
    • Management consulting and management services including financial, strategic, human resources, marketing, operations and supply chain management.
    • Business consulting services including pubic relations services
    • Information technology (IT) consulting and support services
    • Information technology (IT) design and development services
    • Hosting and information technology (IT) infrastructure provisioning services
    • IT infrastructure and network management services
    • Other information technology services
      18% Slab
    Internet Telecommunications Services :
    • On-line text based information such as online books, newspapers, periodicals, directories etc
    • On-line audio/ video content
    • Other on-line contents
    Maintenance, Repair and Installation Services :
    • Maintenance and repair services of office and accounting machinery/computers and peripherals/telecommunication equipment and apparatus.
    • Installation services of office and accounting machinery and computers/ radio, television and communications equipment and apparatus.
    Other types of IT services :
    • Research and development originals in computer-related sciences
    • Telephone-based support services
    • Other information services n.e.c.

GST on Loans and Advances

Earlier Service Tax was levied on Loans which has now been replaced by GST which would now be levied on loans. The rate of Service Tax was 15% whereas the rate of GST is 18%. A lot of people are of the opinion that the effective cost of having a loan would increase as the rate of GST is 3% higher than the rate of Service Tax. Several people are of the opinion that their EMI’s would increase as the rate has been increased by 3%. However, this is not the case as GST is not levied on repayment of loan or on payment of Interest on Loan.

GST is only levied on the processing charges and any other charges paid to the bank excluding the principal repayment and interest payment. These other charges include the Loan Processing Fees, Loan Prepayment Charges and other charges, if any. As a major chunk of the loan repayment comprises of principal repayment and interest payment, the impact of GST on Loans would be very negligible. The impact of GST on Home Loans and Personal Loans has been explained below for a much better understanding of the impact.

Mentioned below are the important loans and their GST rates:

(a) Personal Loan- 18%

(b) Home Loans- 18%

(c) Car Loan– 18%


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