GST Council meet: Big relief for SMEs, exporters; 27 items get cheaper

The GST Council made sweeping changes to give relief to small and medium businesses on filing and payment of taxes, eased rules for exporters and cut tax rates on more than two dozen items.

New Delhi: Three months after the rollout of the new indirect tax regime, the GST Council on Friday made sweeping changes to give relief to small and medium businesses on filing and payment of taxes, eased rules for exporters and cut tax rates on more than two dozen items.

Businesses with annual turnover of up to Rs 1.5 crore, which constitute 90 percent of the taxpayer base but pay only 5-6 percent of total tax, have been allowed to file quarterly income returns and pay tax instead of the current provision of monthly filings.

Also, the turnover threshold for businesses to avail of the composition scheme that allows them to pay 1-5 percent tax without going through tedious formalities, was raised to Rs 1 crore from current Rs 75 lakh.

The government has also revoked GST notification on gems and jewellery. A separate notification in this regard will be issued later. Bringing in some more reforms, the government said that any person buying jewellery worth above Rs 50,000 will not have to furnish PAN card and Aadhaar Card details.

Entities dealing in gems, jewellery and other high value goods and has an annual turnover of over Rs 2 crore will no longer be under the purview of the money laundering act.

Eating out is set to become cheaper with the GST Council agreeing to reduce the GST rate from the current 18 percent to 12 percent. Jaitley said a group of ministers would revisit the tax on AC restaurants.

Finance Minister Arun Jaitley has recommended the following facilitative changes to ease the burden of compliance on small and medium businesses:

Composition Scheme

The composition scheme shall be made available to taxpayers having annual aggregate turnover of up to Rs 1 crore as compared to the current turnover threshold of Rs 75 lakh. This threshold of turnover for special category States, except Jammu & Kashmir and Uttarakhand, shall be increased to Rs 75 lakh from Rs 50 lakh .

The turnover threshold for Jammu & Kashmir and Uttarakhand shall be Rs 1 crore. The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31.03.2018.

Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.

A Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.

Relief for Small and Medium Enterprises

Presently, anyone making inter-state taxable supplies, except inter-State job worker, is compulsorily required to register, irrespective of turnover.  It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs 20 lakh (Rs 10 lakh in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.

To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs 1.5 crores, it has been decided that such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxes only on a quarterly basis, starting from the Third Quarter of this Financial Year i.e. October-December, 2017. The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis. The due dates for filing the quarterly returns for such taxpayers shall be announced in due course. Meanwhile, all taxpayers will be required to file FORM GSTR-3B on a monthly basis till December, 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September, 2017. Due dates for filing the returns for the month of July, 2017 have already been announced. The due dates for the months of August and September, 2017 will be announced in due course.

The requirement to pay GST on advances received is also proving to be burdensome for small dealers and manufacturers. In order to mitigate their inconvenience on this account, it has been decided that taxpayers having annual aggregate turnover up to Rs 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.

Other Facilitation Measures

After assessing the readiness of the trade, industry and Government departments, it has been decided that registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.

The e-way bill system shall be introduced in a staggered manner with effect from 01.01.2018 and shall be rolled out nationwide with effect from 01.04.2018. This is in order to give trade and industry more time to acclimatize itself with the GST regime.

The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 shall be extended to 15.11.2017.

Also, the last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, 2017 shall be extended to 15.11.2017.

Invoice Rules are being modified to provide relief to certain classes of registered persons.

Tax rates on 27 items cut

Jaitley said the Council also decided to cut GST rate on 27 common use items.

GST on unbranded namkeen, unbranded ayurvedic medicine, sliced dried mango and khakra has been cut to 5 percent from 12 percent, while the same on man-made yarn used in textile sector has been reduced to 12 percent from 18 percent.

Tax on stationery items, stones used for flooring (other than marble and granite), diesel engine parts and pump parts has been cut to 18 percent from 28 percent. GST on e-waste has been slashed to 5 percent from 28 percent.

Food packets given to school kids under Integrated Child Development Scheme (ICDS) will attract 5 percent tax instead of 12 percent.

Job works like zari, imitation, food items and printing items would attract 5 percent tax instead of 12 percent. Government contracts involving high amount of labour will be levied 5 percent GST instead of 12 percent in order to contain cost of those programmes, he said.