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The Goods and Services tax (GST) council cut rates on 27 items and 12 services,after its meeting on Friday 6th October 2017 and has brought about a number of changes which will help even out the functioning of small businesses and exporters.
GST rates on 27 common use items have been reduced. Items such as unbranded namkeen, unbranded ayurvedic medicine, sliced dried mango and khakra will be taxed at 5% instead of 12% earlier, while rate of tax on man-made yarn used in textile sector has been reduced to 12 per cent from 18 per cent.
In addition to the above items, stationery items, stones used for flooring , diesel engine parts and pump parts will now be taxed at 18% instead of 28%. There has been a substantial reduction in the GST for e-waste to 5% from 28% .
In order to make them feasible, labor intensive Government contracts will be levied 5 per cent GST instead of 12 per cent .
Service providers with revenue below Rs 20 lakh have been exempted from iGST as per the announcement made on Friday.
The GST Council, in its Friday meet , has decided to increase the limit of composition scheme to Rs 1 crore from current Rs 75 lakh for small businesses. The small businesses are free to file returns on a quarterly basis. Finance minister Mr Arun Jaitley reveals that 25-26 lakhs out of the 72 lakhs tax payers who mitigated to GST system, are new tax payers, majority of which have a turnover of less than 1 crore. This step is administered to lightened the burden of compliance on them.
The Council also approved a proposal that allows small tax payers with a turnover of less than Rs 1.5 crore to file quarterly returns, compared to the earlier requirement of filing monthly returns. However taxpayers with annual turnover of above 1.5 crore, will file as per the old filing requirement.
In order to solve the liquidity problem faced by exporters, the GST council has asked the government to start issuing refund cheques from 10 October. The council also decided to set up an e-wallet that can be used by each exporter. A notional amount will be given as an advance amount in this wallet. This will enable GST credit against which the exporters refund could be offset.
GST Council will closely monitor the changes and its impact on the economy and would make further modifications as required.
