GST simplified: Council cuts tax rates on 27 goods. Here's how consumers will gain

Mail Today Bureau   New Delhi     Last Updated: October 7, 2017  | 00:00 IST
GST simplified: Council cuts tax rates on 27 goods. Here's how consumers will gain

The GST Council, headed by Finance Minister Arun Jaitley on Friday tweaked the GST regime to provide relief to thousands of small firms and exporters and reduced the tax burden on 27 goods including food items such as namkeens which will turn cheaper. Based on the feedback received from small and medium enterprises, the GST Council on Friday raised the turnover threshold from Rs 75 lakh to Rs 1 crore for businesses to avail of the composition scheme that allows them to pay 1-5 per cent tax without going through tedious formalities of filing detailed returns.

With small businesses and traders complaining about the compliance burden the new Goods and Services Tax (GST) regime has put on them, the Council decided to give more businesses the option to avail of the Composition Scheme by raising the turnover limit to Rs 1 crore. The scheme allows small businesses, including eateries, to pay 1-5 percent tax at a fixed rate of the turnover without having to deal with the three- stage filing process.

The tax rate for traders of goods in the composition scheme is 1 per cent, while it is 2 per cent for manufacturers and 5 per cent for restaurants.

So far over 15 lakh out of the 90 lakh registered businesses have opted for the composition scheme. No input tax credit can be claimed by those opting for composition scheme. Also, the taxpayer can only make intra-state supply (sell in the same state) and cannot undertake inter-state supply of goods. Apart from this the facility of filing quarterly returns will be available for businesses with an annual turnover of up to Rs 1.5 crore. "These small and medium taxpayers account for nearly 90 per cent of GST return filers, but may pay marginal or zero tax," Jaitley said.

The relaxation will be available for returns that are filed from October. A group of State finance ministers will also be set up to look into the taxation structure of restaurants and what should be done as they have not reduced prices despite input tax credit. It will also look into the definition of turnover and inter state sales by those interested he composition scheme.

Keeping in view of the liquidity problem being faced by the exporters, the Council has decided to immediately start refund process for the month of July by 10th October while exporters can get refund of August by 18th October.

"As a long term solution, an ewallet will be created for every exporter where a notional amount will be given in advance. The refund will be offset later against that amount," Jaitley said The e-wallet option will be launched by 1st April, he added. "The decisions were made based on the consideration of how to improve revenue and to create convenience for tax payers based on the revenue pattern," said Finance Minister Arun Jaitley, who chairs the GST Council. The meeting of the GST Council was advanced from late October to ensure fast resolution of concerns of exporters and small businesses.

CONSUMERS TO GAIN

  • Some food items have become cheaper with the GST rate being reduced to 5% from 12% earlier. These include branded namkeens, sliced and dried mangoes, khakra and plain roti.
  • Poster colour and modeling paste for the amusement of children will cost less as GST has been reduced from 28%to 18%.
  • Office articles such as files and loose-leaf binders, letter clips, indexing tags and upholstery have also turned cheaper with the GST being reduced to 18%from26%.
  • For unbranded Ayurvedic products the tax has been reduced from 12% to 5%. Other items on which GSDT has been reduced include yarn and diesel engine parts used in water pumping sets in the farm sector.
  • In an environmentfriendly gesture, GST on ewaste, plastic, rubber, paper waste has also been cut 5% from the 18% -28% range earlier.