Call it the complications at the execution level or the hassles faced by traders and public, the structure of Goods and Services Tax (GST) has kept on changing ever since it was launched by the Prime Minister Narendra Modi on July 1, 2017. Though the call for GST was unanimous, the implementation didn’t suit most businessmen who are yet to decode the indirect tax regime.
Even the chartered accountants are struggling to cope with the complexities arising due to the new tax system. As a result, the GST tax rate list undergoes a change whenever the council meets. If the decision to slash the rates on more than 40 items in the September meet was not enough, the latest council meet on October 6, 2017 decided to lower the rates of 27 items and few services as well. Let’s see the decisions taken in the meeting.
GST Tax Rates Slashed on 27 Items
The GST Council meet, chaired by the Finance Minister Arun Jaitley, has decided to lower the tax rates on 27 items. Some have been moved from 18% and 12% tax rates to 5%, while others are getting moved to a one slab lower than earlier.
Items Moved to a Lower Tax Bracket of 5%
The tax rates on various food products, medicines and daily use items have been cut to 5%. The list comprises sliced dried mango, plain chapati, khakra, unbranded namkeen, unbranded & ayurvedic medicines, paper waste, real zari, rubber waste, duty credit scrips, e-waste, hard rubber waste, biomass briquettes, as well as food packets to economically weaker sections, etc. These were earlier taxed at a rate of 12% and above.
Taxes on Textile Products Cut to 12%
Textile manufacturers have reasons to smile this Diwali as tax rates on products like man-made yarn, sewing thread of man-made & synthetic filaments and man-made staple fibers yarn are cut to 12% from earlier 18% slab. With a reduction in the rates, the cost of textile products like clothes and other accessories are expected to come down and which could make the customers to spend more this Diwali.
Which Have Fallen to 18% Tax Rate from the Highest of 28%?
Few items, which were under the slab of 28% tax rate, have now been moved to 18%, making them cheaper than before. These include pump parts, diesel engine parts, stationery items such as poster colours and modelling waste, and stones used for flooring.
What Else Other Than the Rate Cuts?
It’s not only the rates that underwent a change, even some norms for businesses were eased so as to promote their growth and ensure an uninterrupted supply of goods and services. From exporters to small and medium enterprises (SMEs), the council brought a change and which could well bring a positive sentiment across corporate and consumer segments. Keen to know those changes? Take a look below.
Read Also: Revised GST Slab Rates on 27 Products
- A big relief for exporters as they won’t have to pay Integrated Goods and Services Tax (IGST) for a period as long as 6 months. India’s exports grew by 26% to $28.6 billion during September 2017, the fastest in 6 months. And with the exporters being given a tax relief for 6 months, it won’t be a surprise if the outward shipments clock new records.
- The government has announced to process the refund cheques of exporters for July and August by October 10 and 18, respectively.
- In addition, the government has decided to develop e-wallets for exporters and introduce the same by April 2018.
SMEs & Other Businesses
- In a significant move, the government has eased the return filing norms for businesses with a turnover of ₹1.5 crore by changing its frequency to quarterly as opposed to monthly
- Also, the composition scheme, which enables businesses to get free from the complex tax compliance norms by keeping their tax liability to the tune of 1%-5%, has been extended to include firms with a turnover of ₹1 crore, from the earlier limit of ₹75 lakh.
So, as the next meet council is slated to take place in November, don’t be surprised to see further changes in the rates and businesses in general. From the trends, it can be said that we are in for a much more friendly GST tax slab regime in the times to come.