The recalibration of hotel and restaurant taxes came after appeals from the governments of Rajasthan and Goa - states that have a thriving tourism industry. Both states had pushed for a re-look, claiming that 28 per cent would be too high a tax slab for smaller and budget hotels.
The hospitality industry has also been apprehensive that high GST rates will lower the footfall and for the rooms already booked, they will have to raise prices and alienate tourists, or absorb the losses.
Speaking after a meeting of a GST coordination panel, Mr Jaitley also said companies will be allowed to file late returns for the first two months, so they can adapt to a new online filing system.
Dubbed the biggest tax reform in India since Independence, the Goods and Services Tax will require traders to file three online returns each month. Some business lobby groups have requested that the rollout be delayed to allow them more time to get ready.
A large part of today's meet was used to thrash out the tax rates on lottery winnings, the minister said.
"Some states have banned lotteries, some states conduct lotteries...finally the consensus was that the lotteries will be of two kinds. State-run lotteries and private-run lotteries authorised by the states. State-run lotteries will be taxed at 12 per cent," he said.