What transpired at 17th GST Council meeting
The 17th GST Council meeting - the last but one before the final roll out of Goods and Services Tax, mulls over the most crucial issues, has already decided on some and is hopeful of laying the rest of the pending matters to rest.
It has been decided in today’s meeting that the official launch of GST will take place on the midnight of June 30 at Vigyan Bhavan, New Delhi, as scheduled.
However, the timeline for statutory compliances for the first two months has been relaxed. A summary return of self-declaration will be accepted for first two months in place of the prescribed one and so on.
This applies to the proposed e-way bill procedures too. The proposed draft has some impractical provisions of validity of e-way bills from 1 to 15 days linked to a distance ranging from 100km to 1,000km and above - over 100km the validity will expire in 24 hours and for 1,000km in 15 days.
Until further consultations on e-way bill rules, there will be an alternative route/rule to temporarily regulate movement of goods at checkposts.
The council is now expected to float a request for proposal (RFP) to rope in an IT partner to help in the process of conducting the movement of goods and its regulation at checkposts without delay and stoppages.
Hope the checkpost era comes to an end from the midnight of June 30, 2017.
The big revision came in rates on hotel tariffs. For only hotels with daily tariffs above Rs 7,500, GST rate at 28 per cent will apply. Earlier, the minimum tariff for this tax bracket was above Rs 5,000.
Hotels with tariffs ranging from Rs 2,500 to Rs 7,500 will now enjoy revised GST rate of Rs 18 per cent. However, the much awaited GST rate of five per cent for small restaurants on a par with dhabas has eluded them despite nation-wide strikes observed by this segment.
To the contrary, one would be surprised to see some unexpected relief handed out on a platter to high-end restaurants that attracted GST rate of 28 per cent earlier – it has now been revised downward to 18 per cent.
It was also reported that state-run lotteries will be taxed at 12 per cent while state authorised lotteries meaning outsourced lotteries by the states would be taxed at 28 per cent.
Businesses dealing only in goods can opt for composition scheme whose threshold has been set at Rs 75 lakh by paying GST at a fixed percentage of 2 per cent for manufacturers and 1 per cent for dealers/traders with a new negative list of three items introduced in the present meeting - ice cream, pan masala and tobacco.
Service providers have been kept outside the scope of this scheme. However, restaurant sector taxpayers may alone opt for this scheme and can pay a fixed rate of 5 per cent.
Nearly 65.6 lakh taxpayers have since registered under GST. This accounts for around 81 per cent of total taxpayers.
Out of the total taxpayers of 95 lakh roughly, some would come under the exemption threshold, and will not have to register, said the finance minister.
New registration in GST will be commenced from June 25 to bring all remaining taxpayers into the GST fold.
The GST network’s preparedness was in question. Speaking to reporters after the GST Council meeting, Kerala finance minister Isaac Thomas said the “GST network is not fully prepared. But we decided to take the risk rather than delay rollout. It is something like building a bridge while walking over the bridge”.
The GST Council cleared six rules which included anti-profiteering rules as well. The anti-profiteering body is expected to have a lifespan of two years. This appears to be a fair deal to limit its shelf life to two years.
Confederation of Indian Industry’s latest paper “Feet on the Street” voices concern that if vendors of suppliers refuse to disclose their cost base, it will make the job of the suppliers an uphill task to get costing data certified by independent experts to compute the exact GST gains on account of rate revision and increased availability of ITC across taxes and goods and services, post GST.
The GST is expected to simplify the tax collection procedure, making it easier to administer and enforce, as well as help remove double taxation at various levels. It is estimated to add 2 to 4 percentage points to the country’s GDP.
But, that looks more like theory as more reactions and reports and trade data come in from industry players and other stakeholders in almost the last week before the roll out. It is likely to have wide swings of revenue as per international experience of recent times in Australia, Singapore and Malaysia at least.
West Bengal has passed an ordinance, while three states are expected to pass the Bill in the next ten days. All states are expected to clear the GST Bills by the end of the next week.
The Jammu and Kashmir Assembly was recently adjourned indefinitely without taking up the Bill. The opposition has raised some serious questions about GST which it apprehends to be the last nail on the state’s taxing autonomy.
The state will now take up the Bill after an all-party panel submits its report shortly to move forward with the rest. For now, GST is an idea whose time has come.
The next GST Council meeting will take place on the momentous midnight hour of June 30, just before the hour of the big July 1 roll out. The whole nation is waiting with bated breath.
Also read: Who's afraid of GST?