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GST Council revamps Composition Scheme; tax regime for restaurants; reduces rates on 178 goods; Only GSTR-3B to be filed; GSTR-2 & 3 killed

Published: Nov 10, 2017

By TIOL News Service

GUWAHATI, NOV 10, 2017: THE GST Council has finally done it. It deserves credit for shifting as many as 178 items from the highest tax bracket of 28% to 18%, 12% & 5% slabs at its 23rd meeting at Guwahati today. A good number of items have even been moved from 28% to 12%; many items from 18% to 12% and even 5%. And the reduced tax rate would come into effect from November 15, 2017. After this decision, only about 50 items are now left in the highest tax bracket and they are mostly white goods, demerit goods and sin goods.

Besides the goods, the Council also approved the key recommendations of the GoM for complete revamp of the Composition Scheme. The threshold limit is going to be hiked to Rs 2 Crore but only Rs 1.5 crore is to be notified after the law is amended in future. And the immediate option before the Govt would be to do so in the UnionBudget 2018.

The other changes for the Composition dealers is that the tax rate for manufacturers and traders has been equalled to 1% without ITC and no inter-state supplies. However, a major concession has come in the form of permission to provide services in addition to goods but only upto Rs 5 lakh annually. Secondly, if exempted goods are being sold by a trader along with taxable goods, the tax rate will apply only on taxable supplies.

Here comes the bad news for restaurant sector which was found to have failed to pass on the ITC benefits to consumers. In view of such findings, the Council today decided to make it a uniform rate of 5% for all restaurants - small, AC or non-AC and smaller restaurants will not be eligible for the Composition Scheme. However, the taxation regime for restaurants housed in hotels will remain unchanged.

To lessen the burden of back-breaking compliance, the Council has decided to do away with GSTR-2 & GSTR-3 till March 31, 2018. A committee is going to be set up to review the entire Business Process and explore whether it would be wiser to continue with the invoice-matching. Meanwhile, the industry would continue to file GSTR-1 along with GSTR-3B till March 31, 2018. In view of these changes, the due dates for various GSTRs have also been extended, including that of TRANS-01.

On the late fee front, the Council decided to grant relief by reducing it from Rs 200 per day to Rs 50 per day for general return-filers. For those who have only NIL returns, the late fee has been reduced from Rs 200 per day to Rs 20 per day.