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GST Council takes slew of decisions to reduce tax rates & simplify compliance norms

Published: Jul 21, 2018

By TIOL News Service

NEW DELHI, JULY 21, 2018: IT was a long day for the GST Council members and the teams of officials - a very large agenda where focus was on rationalisation of tax rates and simplification of procedures. Thus has come a mega decision to allow quarterly return-filing but monthly tax payment for taxpayers up to Rs five crore taxpayer. For the composition scheme, the limit has been hiked to Rs 1.5 crore with a gift-wrapped condition of allowing services upto 10% of the turnover with a maximum limit of Rs five lakh. While briefing the media, the stand-in Finance Minister, Mr Piyush Goyal, said that it would benefit over 90% of total registered taxpayers.

Announcing the tax rate reduction on a large number of goods from 20% slab to 10% slab and 18% slab to 12% slab with an exception of a few items where rate was reduced to 5% and 12% to 5%, Mr Goyal said that the eyes of the Council were set on granting relief to the middle class consumers. That is how the rates have been lowered on a large number of electronic items like TV, grinder, mixture, fridge, paint etc. Some of the items such sanitary napkins, handicrafts items etc have also been exempted. Handloom sector has been granted relief by reducing the tax rate. To grant relief to the textile sector which is finding it difficult to compete in the exports market, the Council has decided to grant ITC refund but only from the ones accumulated from July 27, 2018. All such ITC accumulated since last year would be embargoed.

While approving the amendments in the GST laws, the Council also decided to suspend the RCM provisions u/s 9(4) till September 2019. Since a good number of Special Category States agreed to enhancing the exemption threshold from Rs 10 lakhs to 20 lakhs, the Council has approved the same for six of them and also approved provisions to do so without resorting to an amendment in the law. Thus the exemption limit in the States like HP, Uttranchal, Assam and Arunachal will go up from July 27 - the day when all the changes approved today would come into effect.

The Council also decided to meet again on August 4, 2018 and discuss a large basket of suggestions and issues relating only to the MSME sector. On this day it would also debate over the possible sops to incentivise digital payments. The Council has also directed the GSTN to study the feasibility of linking all tolls on the highways and nakkas through RAFD tags for faster movement of goods. It also approved the idea to issue an SOP to deal with the penalty issue arising from e-Way Bill and ensure that the quantum of penalty remains uniform across the country. To further assist the pending migration the Council has decided that such a window would remain open till August-end to complete the process.

While reducing tax rate from 18% to 5% on e-books and also from 12% to 5% on ethnol, the Council also announced that the 28% tax rate will apply only on actual hotel tariff of more than Rs 7500 rather than the declared tariff rate. It is expected to give major relief to the hotel sector. The Council has also approved the new GSTR which is going to be two-page return but its implementation date is to be decided only after pilot testing is done. The Council also approved the demand of some of the States regarding the provisional division of IGST and CESS funds lying in the books.