Active Stocks
Sat Mar 02 2024 12:49:58
  1. Tata Steel share price
  2. 155.15 3.43%
  1. HDFC Bank share price
  2. 1,430.35 -0.06%
  1. State Bank Of India share price
  2. 773.05 0.49%
  1. Tata Motors share price
  2. 988.40 1.15%
  1. Wipro share price
  2. 522.65 0.67%
Business News/ Politics / Policy/  GST bonanza for firms, consumers on the anvil

GST bonanza for firms, consumers on the anvil

The GST Council, at its Guwahati meeting today, will trim items that attract the highest 28% GST rate and unveil concessions for businesses

The key decisions that the GST Council is expected to announce at its Guwahati meeting today.Premium
The key decisions that the GST Council is expected to announce at its Guwahati meeting today.

Guwahati: The GST Council is likely to announce relief for consumers and big and small businesses at its meeting in Guwahati on Friday. Small businesses and eateries will also get major relief as the flat GST rate they can pay under a special window called the composition scheme is likely to be cut.

The GST Council, comprising the Union finance minister and state finance ministers, is the apex decision-making authority on the goods and services tax.

Not only is this a bold attempt to remove the creases in the new system, the GST Council, if it signs off on the proposals, will potentially serve a political bonanza for the ruling Bharatiya Janata Party (BJP)—which is presently locked in electoral combat with the Congress in Gujarat.

This is because it will partly alleviate the distress faced by small and medium enterprises (SMEs) in Gujarat, some of whom have threatened to vote against the BJP.

“This GST Council meeting will be big on optics," said a state finance minister who declined to be identified.

Permission for big businesses to file GST returns quarterly instead of monthly, pruning the list of items in the highest tax slab of 28% and raising the sales ceiling for small businesses from Rs1 crore to Rs1.5 crore to avail of the composition scheme are among the proposals before the GST Council. The scheme allows taxes to be paid at a concessional rate and makes compliance easy.

“It makes sense to do away with the monthly return filing requirement for all as it eliminates avoidable paperwork," said the council member cited earlier. This person said that reducing the number of items in the highest tax slab will be a highlight of Friday’s talks.

Another official, who also spoke on condition of anonymity, said the 28% slab should be re-categorized as a special slab, covering only a handful of items. “We will also push for raising the eligibility threshold for the composition scheme to Rs2 crore sales," said this official.

However, some on the GST Council believe that while change should be initiated to correct flaws, care should be taken not to dilute the tax reform. This section of the council believes a logical approach should be adopted towards relaxations to be given to businesses.

In the original GST design, there was no place for tax exemptions—everyone pays tax and wherever legitimate tax incentives are needed, it is given as a refund. But to help exporters tide over a liquidity crisis, the council at its last meeting on 6 October decided to continue two pre-GST schemes that allow duty-free sourcing of materials for export production till March 2018.

“Instead of granting relief one by one to businesses, it may be desirable to focus only on the 10-15% assessees who contribute about 80% of revenue for compliance and liberalize the rules for everyone else," said a third official, who also declined to be named.

The GST Council is expected to accept the recommendations of a ministerial panel which has proposed reducing the tax rate on air-conditioned restaurants to 12% from 18% now and to reduce tax rates under the composition scheme to 1%.

The panel recommended a 1% tax for traders, manufacturers and restaurants, Himanta Biswa Sarma, the convener of the panel, told reporters after the 29 October GST Council meeting. It was previously 1%, 2% and 5%, respectively.

“Certain essential supplies are covered under the 28% tax gamut and the GST council will take certain populist measures to reduce the tax on such supplies. Industry is waiting for the Council’s decisions eagerly’" said Abhishek A. Rastogi, a partner at law firm Khaitan and Co.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
Catch all the Politics News and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 09 Nov 2017, 10:15 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App