GST rates cut for aam aadmi: Peak rate basked snipped; returns made easier

Finance Minister Piyush Goyal (right) and Finance Secretary Hasmukh Adhia at the 28th meeting of the Goods and Services Tax Council (GSTC) at Vigyan Bhawan in New Delhi on Saturday | Photo: PTI
The Goods and Services Tax Council has pruned the list of items under the peak 28 per cent rate. 

It said on Saturday that it was cutting the rates for consumer goods such as refrigerators, small TV sets, washing machines and vacuum cleaners – the estimated cost to the exchequer is at Rs 60 billion a year. 

The Council also announced cuts in rates on a number of other items, including sanitary napkins from 12 per cent to nil and on e-books to 12 per cent from 18 per cent. All these cuts will be effective from the coming Friday, said Finance Minister Piyush Goyal. 

It also decided to cut the peak rate on juicer mixers, shavers and hair dryers.

Manish Sharma, president, Panasonic India and president of the Consumer Electronics and Appliances Manufacturers Association, said: “This will prove a catalyst for the industry and the country’s manufacturing sector.”

Besides consumer goods, the Council also reduced the peak rate on lithium batteries to 18 per cent, helping electric vehicles and the mobile telecom industry. 

“This rate reduction indicates the 28 per cent rate bracket would be limited to very few ‘sin’ and luxury products,” said Pratik Jain, partner at consultants PwC India. The finance minister said the Council had decided to allow those with an annual turnover of Rs 50 million to file quarterly returns. 

However, they will have to pay GST every month on the basis of challans. “This would help 93 per cent of assessees to file quarterly returns,” Goyal said. 

GST Network, the levy’s information technology backbone, was working on two simple returns for this purpose — Sugam for business to business transactions and Sahaj for business to consumer ones, he said. 

To further help micro, small and medium enterprises, the Council will again meet on August 4. The meeting will also discuss incentivising of digitial payments, being looked at by the Sushil Modi committee. 

The Council also allowed those having an annual turnover up to Rs 50 million and offering services up to 10 per cent of their turnover or Rs 500,000 to come under the composition scheme. 

Currently, only those with Rs 15 million annual turnover are under the scheme, which allows assessees to pay a reduced flat rate without input tax credit and to file quarterly returns. 

While the Council did not discuss the proposed sugar cess, it reduced the rate on ethanol for use in petrol and diesel from 18 per cent to five per cent. This would help both the sugar and oil industries. 

Relief for truckers

To allay the concerns of truckers, currently on strike, the Council decided to have a standard operating procedure for imposing less severe penalties for small errors in filling of e-way bills. It also decided to link the RFID on vehicles with GST Network, for which the latter will work with the transport ministry, to have this in another six months. However, transporters continued their strike which entered the second day on Saturday, waiting for notifications to this effect. 

Other changes

With milk farmers restive, the Council decided to exempt fortified milk from GST. 

Also, the reverse charge mechanism was deferred for a year, till September 2019. Under this, a buyer has to pay GST, unlike the seller in the usual case. 

Currently, hotels with fare over Rs 7,500 attract 28 per cent tax; those charging less draw 18 per cent. The price taken for that purpose is the declared price. Now, this will be based on the rate charged, said Goyal. 

Goods made by small artisans, rakhis, brooms and commemorative coins have been exempted from GST. 

Bamboo flooring and small handicrafts such as handbags or handmade carpets saw the rates reduced from 18 per cent to 12 per cent. 

At present, footwear up to Rs 500 in price draws GST of five per cent; above that, 18 per cent GST is levied. The Council has extended the five per cent rate to footwear up to Rs 1,000 price.

Textile players currently do not get input tax credit on fibres, as the tax there is higher at 12 per cent than the five per cent on fabric. That anomaly has been done away with and textile players will get the input tax credit after July 27. 

The premium to be paid for the ‘Modi Care’ health insurance scheme will not  attract any GST.

The Council also decided to allow Assam, Meghalaya, Arunachal Pradesh, Himachal Pradesh, Sikkim and Uttarakhand to increase the threshold for exemption under GST to Rs 2 million annual turnover, from Rs 1 million at present. It will also introduce an enabling clause in GST laws to allow any state to increase the limit to up to Rs 2 million. 

Companies are now allowed to have multiple registration within a state. E-commerce entities will have to take registration for the taxable goods they sell on their platform. 

There were complaints that assessees were asked to file returns even when they had applied for cancellation of registration. Now on, filing of returns may be stopped once cancellation is applied for. 

The Council will, via the government, place 17 amendments in the current session of Parliament, including the one for raising the threshold of annual turnover to Rs 15 million from Rs 10 mn for the composition scheme.

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