India’s most comprehensive indirect tax reform – the goods and service tax (GST) – is inching towards a July 1 rollout. The GST council has cut the Rate on household goods and other essential items, raising the threshold for the scheme that requires lesser compliance and approving another key set rules relating to audit and accounts.
At its meeting on Sunday at the Capital, the council revised rates on 66 items such as pickles, sauces, fruit preserves, insulin, cashew nuts, school bags, colouring books, notebooks, printers, cutlery, agarbattis and cinema tickets, following representations from the industry.
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Restaurants, manufacturers and traders having a turnover of up to Rs 75 lakh can avail of the composition scheme with lower rates of 5%, 2%, and 1%, respectively, with lower compliance, against Rs 10 lakh previously. A GST rate of 5% will be applicable on outsourcing of manufacturing or job in textiles and the gems and jewellery sector. Bleaching and cleaning of human hair, a big industry in Midnapore, will not face any tax.
The finance ministry took recommendations from the refitting committee and decided to reduce the rate of 66 items. There was a recommendation of a total of 133 representations.
A number of household items in the packaged food category that had been placed in the 18% bracket such as pickles, mustard sauce, ketchup, fruit preserves and sandwich toppings will now attract 12% GST.
The rate of agarbattis has been lowered from 12% to 5%. School bags will face a rate of 18% instead of 28%, exercise books will attract 12% instead of 18% and colouring books will be exempted instead of the 12% rate. Steel cutlery will attract 12% instead of 18% which was proposed earlier and computer printer will attract 18% instead of 28%. Fly ash bricks and blocks will attract 12% GST.
Movie tickets costing below Rs 100 will attract 18% while those above Rs 100 will attract 28%. States can refund the state GST but there will be no exemption from the central GST.
More entities will be able to take advantage of the composition scheme now with the changes in the threshold. The finance minister also announced that the council had attempted to keep revenue – neutral rate as also ease the burden on the smaller enterprise.
For workers in industries such as textiles and, gems and jewellery, where they take work home, a GST rate of 5% will be charged instead of the 18% standard rate on outsourcing.
GST, which seeks to replace multiple state and central taxes with a single levy, is proposed to be implemented from July 1. Some sections of industry have sought its deferral but the government is not keen to delay it any further.
The council has also agreed to allow additional verification facilities to enrol taxpayers on the GST network including the one-time password and banking verification.
Source: Economic Times
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