Focus on revenue protection, boost for economic growth; no major tax rate cuts likely

Categories: GST Recent News, News
No Comments

The GST Council, headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and Union Territories (UTs), will have its 37th meeting in Goa today in the backdrop of economic growth hitting a six-year low of 5 percent for the first quarter of the current fiscal.

The GST Council’s Fitment Committee, which comprises of revenue officials of both Centre and States, has rejected demands for a cut in tax rate on items ranging from biscuits to cars, owing to tight revenue position, sources told PTI.

“If any proposal of rate reduction for any sector comes for the consideration of the Council, the member would first have to review the revenue position and only then decide,” said an official in the knowledge of the matter to PTI.

The GST meeting will be closely watched as it could help investors gauge the government’s seriousness in reviving growth in Asia’s third-largest economy, Reuters said. Sitharaman has in recent weeks outlined a slew of measures to revive investor sentiment and push growth up from a 25-quarter low of 5 percent in April-June.

Expectations from GST Council

Simplification of GSTR-9: Businesses are hoping that the government focuses more on the simplification of GSTR-9 rather than providing for an extension of the due date. The government may in the upcoming Council meeting consider removing certain disclosure requirements less significant, ClearTax said. Alternatively, it may replace an existing return with a summarised return, which can be easily understood by a taxpayer. It is also expected that the Council may take a decision on providing an exemption to small taxpayers for the annual return compliance requirement for FY 2017-18.

Relief for return filing to small taxpayers: The Council may provide some relief for the annual GST return filing to smaller taxpayers with annual turnover up to Rs 2 crore, according to a report in The Indian Express.

Initiate additional steps to bring down tax evasion: In comparison to the GST revenue collections made in June (Rs 0.99 lakh crore), there has been a slight increase in the collections made in July (Rs 1.02 lakh crore). Also, the revenue collections for July are higher in comparison to the average monthly revenue collection in the previous financial year, ClearTax said. However, the collections made until now have not been sufficient enough to meet the yearly targets.

Input tax treatment in the healthcare sector: Several hospitals have claimed that their yearly profit margins have gone down by around 8 percent since there is no Input Tax Credit (ITC) benefit. Currently, except for cosmetic surgeries, implants, and hair transplant, all other health care services are exempt from GST charges. Since ITC cannot be claimed on them, the cost of inward supplies is increasing. Hence, the healthcare service providers are now urging for an output GST of 5 percent on such taxable services without ITC. It is most likely that the Council will take this discussion further in the upcoming GST Council meeting, ClearTax said.

Discuss amendments in GST Laws: Besides discussion to accommodate the creation of Jammu & Kashmir and Ladakh as Union Territories; the proposal moved by Kerala on introducing e-way bill system for movement of gold and precious stones.

Link new GST registration with Aadhaar: It is expected the Council will deliberate on the proposal of linking new GST registration with Aadhaar and take the quarterly review of cases at National Anti-profiteering Authority (NAA).

Special composition scheme for taxpayers: It is expected the Council will consider the introduction of a special composition scheme for taxpayers supplying brick kilns, sand mining activities, and stone crushers with an increased rate.

Uniform rate of 28% percent for all lotteries: The GST Council is likely to consider a uniform rate of 28 percent for all lotteries, a report in The Times of India said. At present, the goods and services tax (GST) on state lotteries is 12 percent, while those authorized by the state but run by private agencies are taxed at 28 percent.

Raise hotel tariff ceiling: The Fitment Committee report, which will be placed before the GST Council, has recommended raising hotel tariff ceiling to up to Rs 12,000 per night under 18 percent GST slab. At present, 18 percent GST rate is applicable for hotel tariff up to Rs 7,500 per night.

GST Council’s Fitment Committee rejects:

Telecom ministry’s proposal to reduce the GST rate for telecom services from the present 18 percent to 12 percent

Tinkering with the present GST structure for biscuits, bakery products, breakfast cereals, fruits and vegetables, mineral water, ready-to-eat packaged items, and several other food products.

Proposal to reduce the GST rate on the sale of cruise tickets, which attracts GST of 18 percent.

Read More at: