New Delhi, November 8, 2017

GST Council to revisit 28% rate for over 150 items, announce easier compliance norms

In a significant widening of the tax base of the Goods and Services Tax, the Centre and States will discuss including electricity and real estate within the ambit of the indirect levy.

Apart from alcohol and petroleum products, these are two notable exemptions in GST and attract Central and State levies of excise duty, service tax and value-added tax as States have been keen to protect their revenue base.

Sources said that discussions will be initiated on the issue when the GST Council meets in Guwahati on Friday. The committee of officers, which is holding a meeting on Thursday is also expected to examine the proposal and make a presentation to the Council.

The Council is also expected to announce easier compliance provisions for small businesses and lower tax rates for over a 150 items that are currently in the 28 per cent bracket under GST.
Packed agenda

“The Council has a heavy agenda, with a fresh look at items in the top tax bracket, and recommendations of two committees on compliance and return filing under GST,” said another source.

According to sources, the Prime Minister’s Office is also closely monitoring the developments. Tax rates of 150 to 200 items that at present attract 28 per cent GST are expected to be lowered.

The fitment committee of officials is examining the issue and the expected revenue implication. These include many common use goods such as washing machines, construction and electrical fittings as well as items produced by small-scale industries.

“The original objective was to keep the 28 per cent bracket only for luxury goods. Accordingly, the fitment of goods is now being reviewed,” said the source.

The move comes ahead of a slew of State elections and with small and medium businesses finding the compliance requirements for GST burdensome.

To make return filing simpler, the Council, led by Finance Minister Arun Jaitley, is also expected to consider a proposal to allow filing of the summary GSTR-3B by businesses and doing away the requirement of three monthly returns — GSTR 1, GSTR 2 and GSTR 3. If not for all, the facility may be allowed for medium-sized firms.

The Council will also examine the recommendations of a group of Finance Ministers led by Assam Finance Minister Himanta Biswa Sarma that has suggested a GST of 12 per cent on air-conditioned and non-air-conditioned restaurants and a higher threshold and lower tax for the composition scheme.

It has also suggested bringing businesses with an annual turnover of up to Rs.1.5 crore under the scheme, which allows for quarterly filing of returns.

To make GST compliance easier, it is also understood to have recommended lowering the late fee for filing of returns.

Prime Minister Narendra Modi had recently stated that pending issues related to GST compliance would be addressed in the next meeting of the Council.

In its last meeting in October, the Council had also announced significant relaxations for businesses and measures to resolve pending dues of exporters.

[The Hindu Business Line]