After its 25th meeting, the Goods and Services Tax (GST) Council announced rate cuts and clarifications for about 29 goods and 54 categories of services. The panel, headed by Finance Minister Arun Jaitley and comprising representatives of all states, agreed to the clarifications and the new rates will come into effect from next week.
A decision on the introduction of Reverse Charge Mechanism (RCM) only for composition scheme dealers was also taken at the meeting. Addressing the media after the meeting, Jaitley also said about 29 handicraft items would attract no tax and asserted that the move was taken to protect jobs in the handmade industry. India exports about Rs.4,000 crore of handicrafts every year, including handmade carpets. Presently, handicraft items are placed in the 12-18 per cent tax slab.
Rate cuts on items such as used medium and large cars, diamonds and precious stones, biodiesel buses for use in public transport and packaged water in 20 litre bottles, alongside a rationalisation for 54 categories of services, will result in a revenue loss of about Rs.1,000-1,200 crore a year, a senior government official said.
Among the list of goods on which GST rate recommended for reduction from 28% to 18% includeold and used motor vehicles on the margin of the supplier, subject to the condition that no input tax credit of central excise duty/value-added tax or GST paid on such vehicles has been availed by him and buses, for use in public transport, which exclusively run on bio-fuels.
The list of goods on which GST rate recommended for reduction from 18% to 12% are sugar boiled confectionary, drinking water packed in 20 litres bottles, fertilizer grade, phosphoric acid, Bio-diesel Biopesticides, bamboo wood building joinery, drip irrigation system including laterals, sprinklers and Mechanical Sprayer.
The list of goods on which GST rate recommended for reduction from 18% to 5% are Tamarind, Kernel, Powder, Mehendi paste in cones and LPG supplied for supply to household domestic consumers.
Articles of straw, of esparto or of other plaiting materials; basketware and wickerwork are goods on which GST rate recommended for reduction from 12% to 5%. GST on diamonds and precious stones were reduced from 3% to 0.25%.
No GST will be charged for Vibhuti Parts and accessories for manufacture of hearing aids and De-oiled rice bran.
In the services segment, the government will cut taxes on transportation of crude, gasoil, gasoline, jet fuel and services relating to mining, exploration and drilling of oil and natural gas, among other things. Admission to theme parks, water parks, joy rides, merry-go-rounds, gocarting and ballet will now be taxed at 18% instead of 28% and on common effluent treatment plans services from 18% to 12%.
GST on Rice bran (other than de-oiled rice bran) and Cigarette filter rods have been increased from nil to 5%. The finance minister also said a decision on bringing petroleum and other exempt goods under the purview of GST would be taken at the next meeting.
On the other hand, Infosys Chairman Nandan Nilekani has suggested for a system where the seller will upload the invoice and the buyer will acknowledge it to simplify the process of complex GST Return. IT major Infosys is in charge of implementing GSTN (GST Network). The recommendations has already got many takers including Kerala Financial Minister Dr Thomas Isaac who took it to social media websites congratulating him. Aimed to make the process much simpler process, Nilekani’s recommendation will require no filing of returns but only uploading of invoices.
As mentioned, Nilekani’s suggestion will need no uploading of returns. Instead every trader can send his sales invoice daily or weekly. Only if he upload and show the sales the one who bought from him will get the input credit. If he doesn’t upload, nobody will buy from him, since they won’t be getting any input credit from the purchase. In this manner, the computer itself will generate the return looking at the sales and purchase figures. Only traders with more than Rs.1.5 crore turnover has to file detailed returns currently. Kerala would have such 40,000 people. Almost half of them are using computer bills. For the rest, the government could give interest-free loans for computerisation. It’ll make tax collection easier and curb leakage significantly, noted Dr Thomas Isaac on his Facebook post. He also expressed his displeasure with the center for coming up with the idea to make simpler the returns filing process, the foundation behind tax collection at states, only seven months after the GST rollout.
The government is keen to bring back the suspended invoice-matching system after a fall in GST revenue raised concerns over tax evasion. The GST revenue collections fell to Rs.808.08 billion in November, the lowest since the roll-out of the indirect tax in July last year. A final decision would be taken at the next meeting of the Council that has finance ministers from all states. This meeting would be held through video conferencing.