GST relief for small-car buyers, rate cut on 40 other items
HYDERABAD: The GST Council did not raise the cess on auto industry as much as it was expected to, lowered rates on 40 items of daily use, extended the date for filing returns and set up a panel of ministers to monitor issues faced by the GST network.
The council, which met in the capital of Telangana on Saturday for nearly 8 hours, softened the blow on the car industry by introducing only a part of the 10% cess on automobiles, and imposing it in a graded manner .
Finance minister Arun Jaitley said the new cess structure for automobiles is aimed at maintaining the balance between the need for revenues and encouraging manufacturing in the country.
The government had approved an ordinance that empowered the GST Council, consisting of Union and state finance ministers, to increase the cess on automobiles from 15% to 25%. The government had said that the 10% approval is an “enabling provision”.
The Council lowered the tax rates for 40 items that include rubber bands, idly dosa batter, roasted gram, oil cakes, custard powder, dried tamarind, dhop agarbattis and plastic raincoats. Khadi fabric sold through the Khadi and Village Industries Commission outlets have been exempted from GST.
It also decided to extend the date for filing tax returns across different categories of GST payers. The Council wants to ensure that the system stabilizes and taxpayers get to grips with the new tax system.
Technical glitches faced by taxpayers using the GST network figured significantly during the meeting. Jaitley said the network had faced overload. GSTN representatives made a detailed presentation and assured the council that the issues have been resolved.
The council constituted a group of ministers to monitor and resolve the IT challenges faced during GST implementation.
The GST Council has decided to set up a committee consisting of officers from both the Centre and the States under the chairmanship of the Revenue Secretary to examine the issues related to exports.
The council has also decided to constitute a group of ministers to monitor and resolve the IT challenges faced during GST implementation.
Presently, any business making inter-state taxable supplies is not eligible for threshold exemption of Rs 20 lakhs (Rs 10 lakhs in special category states except J&K) and has to register itself for GST.
It was decided to allow an exemption from registration to those making inter-state taxable supplies of handicraft goods up to aggregate turnover of Rs 20 lakhs as long as the person has a permanent account number (PAN) and the goods move under the cover of an e-way bill, irrespective of the value of the consignment. A similar exemption has also been granted to job workers.
The council also plugged a potential route of tax evasion with regarded to branded food product. It said that any dealer who on June 15 2017, had a registered trademark will have to pay a GST of 5%, even if the trademark was later de-registered by the dealer. A rate of 5% if fixed for dealers who use any ‘mark’ or a ‘name’ on which they are entitled to maintain actionable claim.
Any registered person (whether migrated or new registrant) who could not opt for the composition scheme, has been given the option to avail of the scheme up to September 30 and they will be permitted to avail of the benefits of the scheme with effect from October 1.
Tax experts lauded the move to provide relief to the car industry.
“Fixation of the compensation cess on mid-size, large and SUV cars comes as a relief to the automobile sector as the uncertainty surrounding the cess rate will now end,” said Harpreet Singh, Partner, Indirect Tax, at consulting firm KPMG in India.
“Further, maintaining status quo on small cars by not increasing the cess rate, would not only benefit the middle class users, but the Ola and Uber vehicle owners as well,” he said.