The Finance Minister Arun Jaitley-headed GST Council will again meet on July 18 to take stock of the preparedness of the new tax system that promises to stitch together a common national market.
In significant decision, the council also raised the eligibility threshold level of the “composition scheme” — to an annual turnover of Rs 75 lakh from Rs 50 lakh earlier, Jaitley said on Sunday after the council’s meeting.
The council also announced a two-part entertainment tax for cinema. Movie tickets costing Rs 100 or below will attract a GST rate of 18 percent, while those priced at above Rs 100 will be taxed at 28 percent, as opposed to standard 28 percent tax across tickets of all values earlier.
“We had received 133 representations from industry,” Jaitley said.
Under the Composition Scheme under GST, a taxpayer will be required to file summarized returns on a quarterly basis, instead of three monthly returns.
In the scheme, a registered taxpayer will pay tax at a rate not more than 1 percent for manufacturers, 2.5 percent for restaurants and 0.5 percent for other traders.
The finance minister said that threshold level has been raised under the composition scheme given that these three sectors are “mass job creators”.
Under the revised rates, the GST rates for ketchups, instant food mixes, food toppings and pickles have been cut to 12 percent from 18 percent earlier.
Likewise, cutlery will be taxed at 12 percent from 18 percent from 12 percent earlier. Children’s exercise books will also attract a lower GST rate of 12 percent from 18 percent earlier, while drawing books attract zero GST rates.
School bags will now be taxed at 18 percent from 28 percent earlier, insulin at 5 percent from 12 percent, cashew nuts at 5 percent from 12 percent and ball bearings at 18 percent.
The GST rate on computer printers and tractor components have been reduced to 18 percent from 28 percent earlier.
Jaitley said that there will be no change in the earlier agreed GST rate of 18 percent on the telecom sector.
The Council has till now fixed rates of more than 1200 goods and 500 services. Last Saturday it finalised rates for few contentious goods such as gold and jewellery, agricultural implements, biscuits, footwear and textile.
Rules related to anti-profiteering were also being discussed. An ‘anti-profiteering’ clause has been provided in the Centre GST (CGST) and State GST (SGST) laws, in order to ensure that business passes on the benefit of reduced tax incidence on goods or services to the consumers.
Setting up of such a framework will ensure that companies don’t arbitrarily raise prices of goods just before or after the implementation of GST from July 1.The Centre has time and again reiterated that the overall impact of new tax rates is non-inflationary.
The new tax structure will have four broad slab structure — 5, 12, 18 and 28 percent — along with a cess on luxury and demerit goods such as tobacco, pan masala and aerated drinks. Services will also have these four tax slab structure. Most services, except those in the negative list of essential services such as healthcare and education, will come under GST.
The states would receive provisional compensation from Centre for loss of revenue due to abolition of taxes such as VAT (value added tax), octroi and implementation of GST. The compensation would be met through levy of a ‘GST Compensation Cess’ on luxury items and sin goods like tobacco, for the first five years.
Source: Moneycontrol.com