Inverted duty correction on GST Council’s agenda in next week’s meeting

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The Goods and Services Tax (GST) Council in its upcoming two-day meeting is likely to take up the fitment committee’s recommendations which propose raising rates on certain goods and services, including LED lights, lamps, and leather, and also pruning exemptions on a host of items, including some packaged food products, said officials privy to the agenda for the meeting.

The Council may discuss adjusting and rectifying the inverted duty structure for certain items, including printing and drawing ink, they said.

Suggestions also include correcting the inverted duty structure for solar water heaters and systems, along with finished leather and composition leather and the work contract provided to the government. These are expected to be part of the agenda for the meeting on June 28 and June 29 in Chandigarh.

Further, to provide a boost to the unorganised sector, the Council may extend the composition scheme to online sellers and also exempt them from compulsory registration norms, subject to certain conditions.

Currently, small businesses opting for the composition scheme are required to pay 1 per cent tax on their annual turnover, instead of calculating GST liability monthly, and are permitted to make only intra-state supplies. Any taxpayer whose turnover is less than Rs. 1.5 crore can opt for the scheme. However, Section 10(2)(d) of the CGST Act, 2017, restricts businesses or individuals registered under the scheme to sell through e-commerce platforms.

The GST law committee learnt to have discussed these challenges and proposed multiple steps to the Council to weed out the disparity between online and offline sellers with certain riders.

“Representations have also been received for allowing composition dealers to use e-commerce platforms. Due to existing restrictions, there is a lack of parity between online and offline sellers, thereby discouraging small sellers from operating on e-commerce platforms,” according to a source aware of the agenda. According to sources, exemptions will be subject to turnover on an all-India basis prescribed under the law.

For example, small businesses having annual turnover up to Rs. 40 lakh and Rs. 20 lakh for goods and services, respectively (Rs. 20 lakh and Rs. 10 lakh in select states), could avail of this exemption. Those businesses may not be required to make any inter-state taxable supply. They will be required to declare PAN and principal place of business. “By the measures proposed, parity will be ensured between online and offline suppliers, which will give a major push to ease of doing business, especially for micro and small businesses, artisans, and women entrepreneurs working from homes by enabling them to sell their products through e-commerce platforms, the source said.

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