GST On 29 Items, 54 Services Cut; Realty Remains Outside
The all-powerful Goods and Services Tax (GST) Council on January 18 cut tax rate on 29 goods, including second-hand vehicles, confectionery and bio-diesel, while veering around to simplifying return filing process for businesses. Also, tax rate on 54 categories of services, including certain job works, tailoring services and admission to theme parks, have been lowered.
The panel at its next meeting might also consider bringing under the purview of the GST items such as petroleum and real estate, Finance Minister Arun Jaitley said.
The council cut rate on second-hand medium and large cars and SUVs from 28 per cent to 18 per cent and on other old and used motor vehicles to 12 per cent. Tax on diamonds and precious stones was slashed to 0.25 per cent from current three per cent.
While tax rate for bio-diesel was slashed to 12 per cent from 18 per cent, that for public transport buses run on environment-friendly bio-fuels has been reduced to 18 per cent from 28 per cent previously.
Tax rate on irrigation equipment, sugar boiled confectionery, drinking water packed in 20-litre bottles, fertiliser grade phosphoric acid, tamarind kernel power, mehendi paste in cones, LPG supplied by private distributors, articles of straw, velvet fabric and rice bran was also cut.
The new rates would be effective from January 25.
The tax rate cut on 29 goods and 54 services would result in a revenue loss of around Rs 1,000 crore, sources said.
The council, in its 25th meeting on January 18, also discussed process to make return filing simpler with just one return to be filed every month.
Infosys Non-executive Chairman Nandan Nilekani made a presentation on simplification of the return filing process. The council discussed the possibility of retaining only the GSTR- 3B or initial sales return, while mandating sellers to upload their invoices. Jaitley said the GSTR-3B and the invoices could be matched by tax officers; and in case of difference, at a later stage businesses could be asked to explain.
"It was finally culminating into filing 3B returns and supplier invoice, which would be adequate," he said. Asked if filing only one return is the way forward, he said "that seems to be the course".
Businesses at present have to file the GSTR-3B as well as the GSTR-1, the final invoice-wise sales returns.
The GST was rolled out from July 1, 2017, by subsuming most of the Central and state indirect taxes into a single tax. But, crude oil, natural gas, diesel, petrol and air turbine fuel have not been included in the ambit of GST as of now. Also, real estate was kept out of the GST.
The minister further said that a nation-wide roll-out of e-way Bill will happen on February 1 for inter-state transportation of goods through roads. Additionally, 15 states have said they will also start off with e-way Bill for intra-state movement of goods on the same day.
"Therefore, the trade and transport industry have to comply with," he said, adding that the e-way Bill would act as anti-evasion measure.
In view of declining GST revenues, the council, chaired by Jaitley and comprising his state counterparts, reviewed the collections in the new indirect tax regime.
Jaitley said so far the government was relying on unilateral declaration made by the business. In view of declining collections, there was a need for anti-evasion measure.
"So far it was voluntary compliance without anti-evasion measures. With all anti-evasion measures put in place, the collections will pick up," he said.
The GST revenue mop-up has been steadily declining over the month as from over Rs 95,000 crore collected in July, it has come down to about Rs 81,000 crore in November.
With inputs from Housing News