This is primarily because under GST, the service tax collections will divided equally between the Centre and the states. Until now, service tax is a central levy, collected only by the Centre.
The Centre and states may agree on an 18 percent service tax rate under goods and services tax (GST), a move that could turn most services, which are now taxed at 15 percent, costlier.
Most services, except those in the negative list of essential services such as healthcare and education, will come under GST. For goods the Centre has proposed a four-tiered GST structure–6, 12, 18 and 26 percent—along with a 4 percent levy on gold. Within these, two standard rates of 12 percent and 18 percent could extend to a majority of the taxable goods.
Sources, said there is a view within the GST council that services such as telecom and insurance should be taxed at a lower band rate of 12 percent, but the Centre is the opinion that the all taxable services should be clubbed under a single rate of 18 percent.
