Three months after the Goods and Services Tax (GST) was rolled out, the government has now announced a significant revamp to the new indirect tax regime to ease the concerns of traders, exporters and small business while reducing the rates on 27 items of common consumption, including roti, sliced dried mango, khakra, namkeens, stationery, man-made yarn -- with most of them brought to five per cent category.
At its 22nd meeting, the Council, of which all states Finance Ministers are member, took several decisions to facilitate ease of doing business. From now on, businesses with annual turnover of up to Rs 1.5 crore, which constitute 90 per cent of the taxpayer base but pay only 5-6 per cent of total tax, have been allowed to file quarterly income returns and pay tax instead of the current provision of monthly filings.
"Traders having Rs 1.5 crore turnover, which are approximately 90 per of assessees outside Composition Scheme, can now file quarterly return," Finance Minister Arun Jaitley said after the meeting. This came just two days after Prime Minister Narendra Modi promised to remove the shortcoming in the new indirect tax regime and to ease woes of traders.
Also, the turnover threshold for businesses to avail of the composition scheme that allows them to pay 1-5 per cent tax without going through tedious formalities, was raised to Rs 1 crore from current Rs 75 lakh.
HERE'S ALL YOU NEED TO KNOW:
# Tax rate on man made yarn was reduced to 12 per cent from the current 18 per cent, which is expected to provide relief to the textile industry. Moreover, tax rate on unbranded namkeen, unbranded ayurvedic medicine, e-waste, paper waste, rubber waste, plastic waste was reduced to 5 per cent.
#Taking stock of the exporters' working capital that was getting blocked under GST affecting their cash liquidity, the Council has decided to disburse their refunds through cheques for July and August from October 10 and October 18 onwards respectively.
#A new electronic system of e-wallet is being created for exporters, which will be implemented from April 1, 2018. The exporters will receive some notional credit in their e-wallet as advance. They will pay their tax and the refund will get offset within the wallet. A technology company will be allotted the task to develop e-wallets for exporters. Till then, exporters will have to pay nominal GST of 0.1 per cent for procuring goods from domestic suppliers for export.
#The Council decided to form a group of finance ministers (GOM) to discuss issues including, allowing inter-state traders under composition scheme, reducing GST on restaurants and exempting zero rated goods in calculation of turnover. The GOM will have to submit its report within a period of two weeks.
#E-way bill, which allows for seamless movement of goods worth over Rs 50,000, is likely to be implemented from April 1, 2018.
#The system shall be introduced in a staggered manner with effect from January 1, 2018 and shall be rolled out nationwide with effect from April 1, in order to give trade and industry more time to acclimatise itself.
#The reverse charge mechanism has been deferred till August 31, 2018. Under it, if a registered trader buys goods from unregistered supplier, the compliance of the unregistered buyer is the responsibility of the registered trader. "The reverse charge mechanism will be reviewed by a committee of experts. This will benefit small businesses and substantially reduce compliance costs," Jaitley said.
#Presently, anyone making inter-state taxable supplies, except inter-state job workers, is compulsorily required to register, irrespective of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs 20 lakh from obtaining registration even if they are making inter-state taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.
#After assessing the readiness of the trade, industry and government departments, it has been decided that registration and operationalisation of TDS/TCS provisions shall be postponed till March 31, 2018.
Full list of the changes in the GST slabs:
