GST Council reduces rates on 27 items; gives relief to small and medium businesses and exporters
The 22nd meeting of the GST Council made some pro-tax payer changes in the existing GST norms. First is the rate reduction on 27 items that are considered to be important from different angles. Second is the even more important one of providing relief to small and medium enterprises and exporters.
On the rate modification, the Council reduced rates of sliced dried mango, selected stationary items, diesel engine parts, few services etc. Some of the high rates of 28 % were brought down to 18% and that of 18% were brought down to 12%.
Relief to small and medium enterprises
Regarding the SME relief, the Council has raised the upper limit of eligibility to the Composition Scheme to RS 1 crore from Rs 75 lakh per year. This will help more traders, manufactures etc., to get less burdensome tax compliance procedure. The Composition Scheme allows the SMEs to file and make payments by paying a marginal tax rate between 1 to 5%.
Under the scheme, the tax rate for traders of goods is 1 per cent, for manufacturers it is 2%, and for supplier of and for suppliers of food or drinks (human consumption except for alcohol) it is 5%. Around 20% of the GST registered firms have availed the composition scheme. The tax compliance burden in the form of registration, tax returns filing, frequency of tax return submission etc. are slightly for composition scheme applicants. The scheme is not allowable for most of the service providers and selected manufacturers. Under the composition scheme, the input tax credit will not be available.
Filing relief for businesses with turnover of Rs 1.5 crores
The Council also allowed businesses with Rs 1.5 crore turnover to file quarterly returns including the annual one instead of the earlier monthly returns. This is expected to reduce paper work of the SMEs and also will reduce overload of the GSTN. A regular taxpayer needs to furnish monthly returns and one annual return.
E-wallet for exporters
One of the main grievances of the exporters was that the tax credit for them (the reimbursement of the taxes they have paid will be returned back to them under various export promotion schemes) takes too much time under the GST. This means that a sizable amount of their money is blocked in the form of tax credits under GST procedure.
The Council her proposed quick reimbursement and allowed e-wallet for exporters by April 2018. Under electronic wallet (e-Wallet), refunds to exporters will be provided in the form of a notional advance.
