Another Market breaking act

Centre and state decided to reduce GST rates on 66 goods and services from pickles and cheaper cinema tickets to insulin and instant food mixes, also eased the compliance burden for small businesses as they raced to be ready to launch the goods and services tax from July 1.The GST Council, which met on Sunday, reduced the rates for nearly half the 133 items on which representations had been received, which included hybrid cars, sanitary napkins, telephone bills and ships manufactured in the country.

“The objective (of earlier rates) was to maintain equivalence to the existing taxes, and in some other cases the fitment had breached this equivalence principle. In others, the reduction is required because of the changing nature of the economy and changes that have occurred in consumer preference,” finance minister Arun Jaitley said.

Over the last three weeks, the council — comprising the Union and state FMs — had decided the rates for 1,211 goods and around 500 services and had been flooded with requests for revision. All goods and services have been put into four tax slabs of 5, 12, 18 and 28% in addition to several mass-consumption items that will attract zero tax.Apart from the changes in rates, the GST Council also reworked the composition scheme for small businesses by allowing those with an annual turnover of Rs 75 lakh, instead of Rs 50 lakh earlier, to avoid any compliance burden and simply pay tax. While some states were demanding that the window be made available to businesses with annual turnover of up to Rs 1 crore, the council opted for a lower ceiling to avoid significant revenue loss, sources told TOI. Depending on the experience with the scheme the ceiling may be enhanced over the next twothree years.–Reported Times Of India

“Increasing the composition scheme limit to Rs 75 lakh from Rs 50 lakh will provide relief to many more small businesses, though service providers (except restaurants) continue to remain outside the ambit of composition levy,” said Pratik Jain, a partner at consulting firm PwC.

As a result, they impressed upon the council to have a lower levy for tickets that cost up to Rs 100 a move that will not impact those who watch movies in multiplexes in large cities. Similarly, based on industry demand, ministers decided to lower the levy on jobwork for textiles, gems and jewellery, printing and leather from 18% to 5%.

“We believe that GST structure which would be introduced on July 01 2017, it’s going to be the most powerful tax reform in Indian History. It would be a great move to have “one nation one tax”. This uniform tax structure will surely rationalize the present indirect tax regime which will lead to a stable economic environment favorable for growth and development for all.

Further, we have an appeal to our Honorable Finance Minister to bring all the IT products under one GST rate of 18%. A uniform rate for the industry will facilitate the entire ecosystem to carry out business with ease. We have found that some of the products are classified under 28% i.e. monitors above 17”, multifunction printers, Ink & Toner Cartridges, IT speakers etc. Today monitors below 17 are almost nonexistent. Education institutions, architects, etc. use minimum monitors with 18.5 to 22” . Moreover Printers are classified in 18% whereas its consumables are classified in 28%.

We hope for One Tax of 18% without exception on all IT Products and reconsideration of scrapping the system of E-way bill. Also, we continue to contribute to Digital India making IT reach for one and all,” said Mr. Asif Khan, Director at Technocrat Infotech Pvt. Ltd

The outcome of this meeting of the GST Council is likely to have a positive impact on various sectors like textiles, education, entertainment etc as their concerns on rates have been heard and addressed by the GST Council,” said Harpreet Singh, partner for indirect tax at KPMG.