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Facing severe criticism over the implementation of Goods and Services Tax, the government on Friday announced a slew of measures to ease the concerns of traders, exporters and small business while slashing the rates on 27 items of common consumption, including roti, khakra, namkeens, stationery, man-made yarn -- with most of them brought to five per cent category.
Three months after the rollout of the new indirect tax regime, the GST Council on Friday made sweeping changes to give relief to small and medium businesses on filing and payment of taxes, eased rules for exporters and cut tax rates on more than two dozen items.
Also, the turnover threshold for businesses to avail of the composition scheme that allows them to pay 1-5 percent tax without going through tedious formalities, was raised to Rs 1 crore from current Rs 75 lakh.
"Compliance burden of medium and small taxpayers in GST is being reduced," finance minister Arun Jaitley told reporters after the 22nd meeting of the Council.
Several items had disguised excise attached to them during the VAT regime which led these items getting placed in higher tax slabs under GST on the basis of equivalence, said Finance Minister Arun Jaitley while addressing a press briefing after the GST Council meet.
The goods which saw a decline in GST rates include sliced dried mangoes (5%), khakra and plan chapati (5%), ICDS food packets (5%), unbranded namkeen (5%), unbrabded ayurvedic medicines (5%), plastic waste (5%), rubber waste (5%), paper waste (5%), manmade yarn (12%), flooring stones expect marble and granite (18%), stationary items (18%), clips (18%), diesel engine parts (18%), pumps parts (18%), and e-waste (5%).
Moreover, job works related to zari embroidery, imitation jewellery, food items, printing, and government contracts involving high element of labour will all attract GST at the rate of 5 per cent.
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.
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