Lower Taxes, Ease of Rules: 5 Key Changes in GST Reforms
The GST council on Friday made sweeping changes three months after the rollout of the new indirect tax regime.
Three months after the rollout of the new indirect tax regime, the GST council on Friday made sweeping changes to give relief to small and medium (SME) businesses on the filing and payment of taxes, eased rules for exporters and cut tax rates on more than two dozen items. The meeting that last almost eight hours was chaired by Finance Minister Arun Jaitley who addressed the nation to announce these changes.
Here are the key takeaways from Jaitley’s address.
1. Good News For SMEs
SME enterprises had complained of tedious compliance burden under the GST that was supposed to be a simple indirect tax regime which replaced over a dozen Central and state taxes.
This is what Jaitley announced to benefit businesses with annual turnover of up to Rs 1.5 crore:
However, SMEs will have to file monthly returns for July, August and September. The switchover to quarterly filing will happen from the cycle starting 1 October.
Further, the turnover threshold for businesses to avail of the composition scheme that allows them to pay 1-5 percent tax without going through tedious formalities, was raised to Rs 1 crore from current Rs 75 lakh.
Compliance burden of medium and small taxpayers in GST is being reduced.Arun Jaitley
2. GST Cuts on 27 Common Use Commodities
The Finance Minister said the GST council was of the opinion that GST rate should be cut on 27 common use items.
See the full list of items and the GST rate changes here.
3. Taxes on Restaurants
Also, a group of ministers has been asked to go into the issue of rationalising taxes on restaurants.
4. Petrol to Stay Out
Jaitley said the GST council is not considering bringing petroleum products under the GST ambit. Earlier this week, Jaitley had urged states to cut down VAT on petroleum products to reduce the petrol and diesel prices after the Centre cut excise duty by Rs 2.
5. Relief For Exporters
Exporters, who have been facing sluggish growth due to global slowdown, will get refunds for the tax paid by them on exports during July and August by October 18, Jaitely said.
For the remainder of the fiscal year, they will operate under an exempted category paying a nominal 0.1 percent GST, he said, adding that from April 1 attempts would be made to launch an e-wallet facility for the exporters to provide liquidity.
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