General election to take place with a span of a year and may be as early as in December this year itself. The ruling party is already in election mode as evident from the outcome of the GST Council 28th meeting held on 21st July, 2018.
The meeting was held under the Chairmanship of Piyush Goyal , Union Minister for Railways , Coal , Finance & Corporate Affairs. The Council provided much relief in many spheres under GST law. Notable among them are further simplification and trade friendly GST periodical returns, especially for small and medium business entities and further rationalization of rates of duty and exemptions on goods and clarification on levy of GST on services. The decisions taken shall be implemented by way of Gazette notifications and circulars. The same can be summarized as under :
Revised monthly return is to be filed in two parts. First for submitting outward supplies and other for availing input tax credit based on invoices uploaded by the supplier. Now, the invoices can be uploaded regularly by the supplier and locked by the buyer for availing input tax credit. This process would facilitate itself in generating large part of the return automatically filled based on the invoices uploaded by the supplier and the supply receiver.
In case of Nil supply in a given month, the return filers (no purchase and no sale) shall now have facility to file its return by sending mere SMS. This is a boon to small business entities.
Further, The Council approved quarterly filing of return for the small taxpayers having turnover below Rs. 5 Cr as an optional facility. The Quarterly return shall be similar to main return. But the required and applicable tax has to be paid on monthly basis as was available in service tax regime. Generally there are two types of supplies – one B2B supply and other B2C supply. For such taxpayers, simplified returns would be in force named as “Sahaj” and “Sugam” for two categories of supply. In these returns details of information required to be filled is lesser than that in the regular return. The designed returns would have facility towards amendment of invoice and also other details filed in the return. For doing so provisions have been made to file amendment return.
There are certain exemption provided related to agriculture, social security and skill development etc., which are core areas of Government for betterment and development. It is seen that reliefs from GST taxation have been provided to the following categories of services –
- Agriculture, farming and food processing industry;
- Education, training and skill development;
- Pension, social security and old age support.
Looking at the socio-economic agenda of the Government, rate of duty on related goods has been rationalized to a great extent, which shall be applicable from 27th July, 2018 after promulgation of necessary notifications. These are:
GST rates reduction on goods from 28% to 18 % :
- Paints and varnishes, Glaziers’ putty, grafting putty, resin cements (Real Estate industry)
- White Goods like – Refrigerators, freezers and other refrigerating or freezing equipment including water cooler, milk coolers, refrigerating equipment for leather industry, ice cream freezer, Vacuum cleaner, washing machines etc.
- Other Domestic electrical appliances like food grinders and mixers and food or vegetable juice extractor, shaver, hair clippers, storage water heaters and immersion heaters, hair dryers, hand dryers, electric smoothing irons etc.
- TV Sets upto the size of 68 cm
- Special purpose motor vehicles. e.g., crane lorries, fire fighting vehicle, concrete mixer lorries, spraying lorries, Works trucks [self-propelled, not fitted with lifting or handling equipment] of the type used in factories, warehouses, dock areas or airports for short transport of goods, Trailers and semi-trailers.
- Miscellaneous articles such as scent sprays and similar toilet sprays, powder-puffs and pads for the application of cosmetics or toilet preparations.
As regards refund of accumulated credit on account of inverted duty structure to fabric manufacturers, there has been big relief to textiles industry. Due to inverted tax structure, refund of accumulated credit was allowed to job workers (service providers) but the facility was not available to fabric manufacturers.
Currently, most fabric attracts GST at the rate of 5% but subject to the condition that refund of accumulated ITC on account of inverted tax structure will not be allowed. However, now the Council has recommended for allowing refund to fabrics on account of inverted duty structure. This will bring cheers to textile hubs like Bhilwara and Surat.
Reduction in rate of tax from 18 %, 12 % and 5 % to Nil. The following goods have been included in this relief :
- Deities made of Stone/Marble/Wood
- Rakhi [without any precious or semi-precious material)
- Sanitary Napkins,
- Coir pith compost
- Sal Leaves siali leaves and their products and Sabai Rope
- PhoolBhariJhadoo [Raw material for Jhadoo]
- Khali dona ( Pattal- Dona)
12% to 5%:
- Chenille fabrics and other fabrics under heading 58
- Handloom dari
- Phosphoric acid (fertilizer grade only).
- Knitted cap/topi having retail sale value not exceeding Rs 1000
On the following goods the rate is slashed from 18% to 12%:
- Bamboo flooring
- Brass Kerosene Pressure Stove.
- Hand Operated Rubber Roller
- Zip and Slide Fasteners
Goods where the rate is brought down from 18% to 5%:
- Ethanol for sale to Oil Marketing Companies for blending with fuel
- Solid bio fuel pellets
(for more details Gazette Notification to be issued by CBIC may be referred to)
As decided earlier Reverse Charge Mechanism (RCM) except compulsory RCM remains suspended till 30th Sep, 2018. However, the big concern of trade still remains is delay in refunds related to export and other refunds, where delay is mainly attributed to GSTN system and its proper connectivity with Customs system.
Mahendra Kothari is Honorary Correspondent, UdaipurTimes (the author is Ahmedabad based Indirect Tax Consultant and he can be reached at firstname.lastname@example.org )