GST structure revised relief to SM, exporters: people celebrate all over country
New Delhi: there may be noise over heavy tax burden on small businesses but initial data does not support the complaint. It turns out that over 40 per cent of the 54 lakh businesses which filed GST returns in July claimed ‘nil’ tax liability and paid no tax. This means that around 22 lakhs did not pay even one rupee GST.
Of the remaining 60 per cent or 32 lakh businesses that filed returns on the GST Network, the IT backbone for the indirect tax, many did not have a cash liability as they opted to use the credits available for service tax or excise that they had paid before GST was implied on July 1st early this year.
Data available with the government showed that apart from those with ‘nil’ returns, close to 70 per cent of the 32 lakh businesses which had a tax liability paid anywhere between re 1 and Rs. 33,000 in taxes. In contrast, just around 0.3 per cent is a little over 10,000 companies accounted for almost two-third of the GST mopped up by the government in July 2017.
Currently close to 1 crore businesses and service providers are registered with GSTN, of which 72 lakhs had migrated from excise, VAT and service tax, while 25-26 lakh new taxpayers have been added, finance minister Arun Jaitley said on Friday. He also said that 94-95 per cent of the collection is from large assesses or those with a turnover of over Rs. 1.5 crore, who make up around 10 per cent of the registered base of taxpayers.
“Everyone is simply seeking exemptions but most are not paying taxes,” said an official. The government’s move to usher in GST has faced criticism with political parties blaming poor implementation for the problems being faced by businesses. The government, while fixing the problem has said that a part of the reason for the criticism is due to the fact that many entities which were earlier out of the net or evading taxes are now being forced to pay up.
Although tax collections are lowered from most of the taxpayers, the government is hoping that GST will help widen the base and create space in the future to reduce tax rate. Jaitley said at Friday’s meeting that GST council also decide on how rate will be tweaked in the future. “as revenue increases, and depending on the revenue neutrality situation in the future, rates will be tailored according to the concept paper (that was cleared),” he said.
For exporters, too, there is good news with Jaitley promising tax refunds for July exports by 10 October, exemption from paying any tax if they are under various promotion schemes and deferment of the implementation of the provision covering tax deduction at source and collection at source to 1 April. He has also assured an e-wallet facility by 1 April.
The GST meet was not so much about tax revisions. Still, rates on about 27 items, including certain processed food items and medicines, have been reduced. Some of them are khakhra, man-made yarn, stationary items, e-waste, plastic waste, rubber waste and job-work services.
The GST Council meeting also slashed rates on 27 items of common consumption, including roti, khakra, namkeens, stationery and man-made yarn — with most of them brought to five percent category.
Tax rate on manmade yarn was reduced to 12 percent from the current 18 percent, which is expected to provide relief to the textile industry.
Moreover, tax rate on unbranded namkeen, unbranded ayurvedic medicine, e-waste, paper waste, rubber waste, plastic waste was reduced to 5 percent.
The tax rate on services, including government contracts involving large labour, job work services in relation to imitation jewellery, some food and food products has been reduced from 12 percent to 5 percent.
These decisions were taken at the 22nd meeting of GST Council.
Below are three tables showing the new rates for about 42 items:
Sr.no. Chapter/ headings/ sub-headings/ tariff items Description Present GST Rate GST Rate Recommended by the GST council
1. 804 Mangoes sliced dried 12% 5%
2. 1905 or 2106 Khakhra and plain chapati/Roti 12% 5%
3. 19 OR 21 Food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under a programme duly approved by the Central Government or any State Government, subject to specified conditions 18% 5%
4. 21 Namkeens other than those put up in unit container and, – (a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily 12% 5%
5. 2710 Imposing GST only on the net quantity of superior kerosene oil [SKO] retained for the manufacture of Linear Alkyl Benzene [LAB] 18% 18% ( Clarification to be issued)
6. 30 Ayurvedic, Unani, Siddha, Homeopathy medicines, other than those bearing a brand name 12% 5%
7. 3213 Poster colour 28% 18%
8. 3407 Modelling paste for children amusement 28% 18%
9. 3915 Plastic waste, parings or scraps 18% 5%
10. 4004 00 00 Rubber waste, pairings or scrap 18% 5%
11. 4017 00 20 Hard rubber waste or scrap 28% 5%
12. 4707 Paper waste or scrap 12% 5%
13. 4907 Duty credit scrips 5% Nil
14. 5401 Sewing thread of manmade filaments, whether or not put up for retail sale 18% 12%
15. 5402,5404,5406 All synthetic filament yarn, such as nylon, polyester, acrylic, etc. 18% 12%
16. 5403,5405,5406 All artificial filament yarn, such as viscose rayon, Cuprammonium 18% 12%
17. 5508 Sewing thread of manmade staple fibres 18% 12%
18. 5509,5510,5511 Yarn of manmade staple fibres 18% 12%
19. 5605 Real Zari 12% 5%
20. 6802 All goods falling under heading 6802 [other than those of marble and granite or those which attract 12% GST] 28% 18%
21. 8305 Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips (for example, for offices, upholstery, packaging), of base metal 28% 5%
22. 7001 Cutting or waste or scrap of glass 18% 5%
23. 8483 Plain shaft bearing 8483 28% 18%
24 84 Parts suitable for use solely or principally with fixed Speed Diesel Engines of power not exceeding 15HP 28% 18%
25. 84 or 85 Parts suitable for use solely or principally with power driven pumps primarily designed for handling water, namely, centrifugal pumps (horizontal and vertical), deep tube-well turbine pumps, submersible pumps, axial flow and mixed flow vertical pumps 28% 18%
26. 84 or 85 E- waste 28%/18% 5%
27. Any chapter Biomass briquettes 18% 5%
GST rates on job work services is being rationalised as follows:
1. Job work services in relation to all products falling in Chapter 71 (including imitation jewellery) 5%
2. Job work services in relation to food and food products falling under Chapters 1 to 22 of the HS Code (except packing of processed milk into packets) 5%
3. Job work services in relation to products falling under Chapters 23 of the HS Code except dog and cat food put up for retail sale (CTH 23091000) 5%
4. Job work in relation to manufacture of umbrella 12%
5. Job work in relation to manufacture of clay bricks falling under CTH 69010010 5%
6. Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil [Heading 9988] 5%
7. Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 12% [Heading 9988] 12%
8. Services by way of printing on job work basis or on goods belonging to others in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 12% [Heading 9988] 18%
9. Services by way of printing in relation to printing of all goods falling under Chapter 48 or 49, which attract GST @ 5% or Nil, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer [(Heading 9989)] 12%
10. Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @12%, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer 12%
11. Services by way of printing of all goods falling under Chapter 48 or 49 which attract GST @18% or above, where only content is supplied by the publisher and the physical inputs including paper used for printing belong to the printer 18%
12. To issue a clarification with regard to classification of printing products/ services
Once the initial hiccups are over, an integrated economy with a uniform tax structure could help lift the economy to the next level of growth. But it is of utmost importance to handhold small and medium enterprises while progressing with its implementation. Else, it could result in chaos. The GST Council deserves credit for acting to avert this. It wouldn’t be an exaggeration to say that the Modi government has just saved the country’s biggest tax reform by acknowledging the concerns and acting early on.
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