Skip to main content

GST Council Adopts Concept Paper Discouraging Tinkering with Rates

GST Council Adopts Concept Paper Discouraging Tinkering with Rates
Paper says no manufactured goods should be given outright exemption as it would hit Make in India
The Goods and Services Tax (GST) Council will actively discourage any further tweaks in rates, following a major revamp of the indirect tax regime on Friday to help small industries and exporters.A concept paper adopted by the council says no manufactured goods should be given outright exemption as this would hinder the Make in India initiative. States should opt for direct subsidy transfers if they want to reduce tax incidence on any item. This suggests that companies looking for such breaks like Apple would not be able to get any outright tax exemptions.
“The whole idea is to look at the issue of rate revision afresh... There should be no ad hocism in rate revision,“ said a government official familiar with the thinking behind the concept paper that will guide changes to tax rates from now on.The key principles in the concept paper include one that manufactured goods should not be placed in the nil bracket as it would then face nil customs duty , impacting the domestic manufacturing adversely.
“As a rule no manufactured good shall be exempt from GST,“ according to the paper, which was approved by the council on Friday. ET has seen a copy of the paper.On Friday , the council raised the composition scheme threshold to Rs 1 crore from Rs 75 lakh, allowed smaller businesses with a turnover of up to Rs 1.5 crore to pay tax and file returns quarterly instead of monthly and exempted exporters from payment of tax under various promotion schemes among other decisions. The changes in GST, which was rolled out nationally on July 1, were made in re sponse to industry feedback.
Any revision will also be carried out keeping in view that there is no blockage of input tax credit or the creation of an inverted duty structure in which input is higher than the finished product, the officials said.Further, changes in tax rates will be considered after a period of at least three months, allowing them to settle in first.The concept paper stated that the GST rate of 28% should be reviewed after three months based on the criteria that have been decided. Goods that yield high revenue, luxury goods and sin goods will not be considered for revision despite being in the highest rate bracket. Revision could be considered for goods of mass consumption or public interest; intermediate goods that are used in business-to-business supplies; goods manufactured by small and medium enterprises; and export-related items.
Tax experts said this will keep the tax structure stable.
“Frequent and ad hoc changes in GST rates are definitely not desirable... This mechanism would ensure that some general guidelines are followed for deciding the rates in future, while making an exception if needed,“ said Pratik Jain, leader, indirect taxes, PwC. Jain hopes that many items in the 28% slab will move to the lower bracket of 18%.
“Benefits of GST can only be realised if rates are moderate,“ Jain said.The council had decided on fitment of goods based on the principle of equivalence--tax incidence prior to launch of GST. GST has four rate slabs--5, 12%, 18% and 28%. There have been changes in a number of goods after the roll out based on representations received from the industry. The council moved more than two dozen items to lower slabs on Friday.
The Economic Times, New Delhi, 09th October 2017

Comments

Popular posts from this blog

Budget: Startup sector gets new Fund of Funds, FM to allocate Rs 10K cr

  The Indian startup sector received a boost with Finance Minister Nirmala Sitharaman announcing the establishment of a new fund of funds (FoF) in the Budget 2025. The minister unveiled a fresh FoF with an expanded scope, allocating Rs 10,000 crore. The initial fund of funds announced by the government with an investment of Rs 10,000 crore successfully catalysed commitments worth Rs 91,000 crore, the minister said.   “The renewal of the Rs 10,000 crore commitment to the Fund of Funds for alternative investment funds (AIFs) is a significant step forward for the Indian startup and investment ecosystem. The initial Rs 10,000 crore commitment catalysed Rs 91,000 crore in investments, and I fully expect this fresh infusion to attract an additional Rs 1 lakh to Rs 1.5 lakh crore in capital,” said Anirudh Damani, managing partner, Artha Venture Funds.   Damani further added that this initiative will provide much-needed growth capital to early-stage startups, further strengthenin...

After RBI rate cut, check latest home loan interest rates of top banks for loans above Rs 75 lakh

  The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points from 6.50% to 6.25% in its monetary policy review as announced on February 7, 2025. After the RBI repo rate cut, banks such as SBI, Canara Bank, PNB, and Union Bank among others have cut their repo linked lending rates. Most other banks are also expected to cut their lending rates in line with the RBI rate cut. After banks cut their lending rates, their home loan borrowers will have to pay less interest. Normally, when a lender cuts the lending rate, borrowers get two options: Either to go for a reduction in EMIs or reduce the tenure of the loan. The second option will help the borrowers clear their home loan outstanding faster. In case, the borrower goes for reduction in EMI then the lower lending rate of the lender would mean lower Equated Monthly Installment (EMI) for borrowers.   EMI is the amount you will pay on a specific date each month till the loan is repaid in full.A repo rate-linked home ...

GST collections rise 9.9% to exceed Rs 1.96 trillion in March 2025

  Gross GST collection in March grew 9.9 per cent to over Rs 1.96 lakh crore, government data showed on Tuesday. GST revenue from domestic transactions rose 8.8 per cent to Rs 1.49 lakh crore, while revenue from imported goods was higher 13.56 per cent to Rs 46,919 crore. Total refunds during March rose 41 per cent to Rs 19,615 crore. After adjusting refunds, net GST revenue stood at over Rs 1.76 lakh crore in March 2025, a 7.3 per cent growth over the year-ago period.       - Business Standard 02 th March, 2025