Lower Rates, Relief For Small Businesses On GST Council Agenda

Reducing rates on some of the 200 items taxed at the highest 28 percent and more relief for small taxpayers will be on the agenda of the 23rd meeting of the Goods and Services Tax Council in Guwahati today, a senior government official told BloombergQuint.

Rates for luxury and demerit goods will not be tweaked, the official said requesting anonymity. Also, no change in rate for services is expected other than some clarifications for tour operators, the official added.

Bihar’s deputy chief minister Sushil Modi had said in a press conference in Patna that the tax rate on 80 percent of the goods in the highest slab is likely to be reduced to 18 percent, according to a report by wire agency PTI.

These may include items like building materials, Kerala Finance Minister Thomas Isaac told BloombergQuint in an interview. A decision to lower rates on consumer products will be taken based on merit, he said.

Only 62 items will remain in the 28 percent slab, with 165 items proposed to be moved to 18 percent, including sanitary ware, detergents and electrical switches, the Business Standard newspaper reported. Washing machines, refrigerators, chocolates and cement are expected to remain in the highest bracket, it said.

The Council is also expected to discuss ways to include real estate in GST, Finance Minister Arun Jaitley had said during his Washington visit. Isaac said Kerala is opposing the proposal. “It’s not the right of the council. Something that's not in the constitution cannot be taken up by the council,” he said.

Also Read: What If Real Estate Is Brought Under GST?

Relief Likely For Small Businesses

The GST Council is expected reduce compliance burden for small taxpayers by adopting changes to the Composition Scheme recommended by a Group of Ministers.

The group suggested lowering the rate for all restaurants to 12 percent. It stands at 18 percent for air-conditioned outlets and 12 percent for others. Revenue implications on the states should be kept in mind, Assam Finance Minister Himanta Biswa Sarma had said on Oct. 29.

Also Read: GST Panel Bats For Threshold Limit Hike, Lower Tax Under Composition Scheme

The group also recommended a flat rate of 0.5 percent of turnover for all taxpayers who avail the Composition Scheme. Those who wish to remove exempted goods from their turnover will need to pay 1 percent, it suggested.

Traders, manufacturers and restaurant owners pay a flat rate of 1 percent, 2 percent, and 5 percent of their turnover as GST under the scheme, respectively. There is no provision to exclude exempted goods from the turnover.

The panel also recommended increasing the turnover cap for opting for the scheme from Rs 1 crore to Rs 1.5 crore, Biswa had said.

It will consider allowing quarterly filing of returns for taxpayers with a turnover above Rs 1.5 crore. In its last meeting, the council had decided to allow quarterly filing of returns for taxpayers with a turnover of up to Rs 1.5 crore.