Cryptocurrency Prices by Coinlib

GST relief for the country: Tax cut on 178 items

In a significant move, the GST council provided a big relief to India Inc and consumers alike. The council lowered the tax rates on 178 items which leaves only 50 items in the top 28 per cent rate slab under the Goods and Services Tax. Only those items which attract the cess, such as sin good and luxury goods, white goods, paint, aircraft and yacht parts, automobile, will be in the top 28 per cent category.

Prime Minister Narendra Modi said that if State government creates trouble, further steps will be taken to address the problems which are faced by traders and businesses in the implementation of the GST by the Council. The council decided to reduce the tax rates on items like washing powder, chocolates, aftershave, deodorants, granite, marble and shampoos from the 28 per cent GST to 18 per cent. Other items which will now be taxed at 18 per cent include plywood, sanitary and construction material, washbasins, wrist watches, mattresses and firefighting equipment. Further, the rate on bricks, some sweets and fly ash has been reduced to 5 per cent from 18 per cent. The GST on dried vegetables has been reduced to nil. All the decisions will be effective from November 15th.

Additionally, small and medium enterprises which were facing a huge compliance burden under GST have also got relaxation in the composition scheme. The Council has decided to increase the threshold for the composition scheme to an annual turnover of ₹1.5 crore. An amendment to the GST law will have to be passed by the Parliament first. A tax rate of 1 per cent will be levied under the scheme which allows for the quarterly filing of the returns and payment of taxes. Manufacturers with service activities with an annual turnover of up to ₹5 lakh can also take the benefit of the scheme.

The GST council also took a view regarding restaurants. It is now decided to do away with the distinction of AC and non AC restaurants and levy a flat 5 per cent tax with no input credit on all eateries. Further, restaurants in five star hotels and outdoor catering will attract 18 per cent tax with an input tax credit. The Council has also announced more simplification in the return filing process and GSTR3 is being continued till March 2018 for all taxpayers. There will be more simplification of the form for filers who have no tax liability. For the current fiscal, taxpayers will only have to file GSTR1 due to the backlog in filing returns.

A lot of GST has been blocked in transitional credit and it is too early to get a clear picture of the collection of tax trend. Pending issues such as inclusion of real estate and electricity will be discussed in the next meeting which is likely to be held in January 2018. However, the rate cuts will cost about ₹20,000 crore to the exchequer and will not come cheap to the economy.

  • Share
logoSubscribe now