New Delhi: Union Finance Minister Arun Jaitley is charing the 23rd GST Council Meeting in Guwahati, Assam on Friday. According to reports, a major tax cut is expected on products that are currently in higher tax slab.
The GST Council may consider reducing items in the 28 percent tax slab and slash rates for daily use items, plastic products, and hand-made furniture as it looks to provide relief to consumers. The council is going to hold its 23rd meeting to review tax slabs on Friday.
Four months after the Goods and Services Tax (GST) was rolled out, the panel headed by Union Finance Minister Arun Jaitley will look at the most comprehensive overhaul of rates, easing returns filing and providing more relief to small and medium enterprises, official sources said.
The Council, comprising state finance ministers, is also set to review the GST returns filing cycle and make it taxpayer friendly.The Council may tomorrow rationalise rates in sectors where the total incidence of taxation has gone up because the goods were either exempt from excise or attracted lower VAT rates under the previous indirect tax regime.
The 23rd meeting of the Council, being held here, will also deliberate on the suggestions made by Assam Finance Minister Himanta Biswa Sarma-headed GoM to cut tax rates for the composition scheme businesses to 1 percent and lower rates for non-AC restaurants.
As the Council tries to accommodate industry concerns on tax rates, after estimating the impact on revenue, a rationalisation of items in the 28 percent tax bracket is expected.
"Most of the daily-use items like shampoo could be lowered to 18 per cent. The tax rate on items like furniture, electric switches, and plastic pipes could be relooked at," an official said.Besides, making the composition scheme more attractive is on the agenda and as per the Group of Ministers (GoM) recommendations, the Council may decide to allow businesses in inter-state trade to opt for the arrangement.
The GoM had also suggested slashing tax rate to 1 percent for manufacturers and restaurants opting for the scheme from 2 percent and 5 percent, respectively.
It was in favour of doing away with the tax rate distinction between AC and non-AC restaurants, those which are not covered under the composition scheme and tax them at a flat 12 percent.
Currently, non-AC restaurants are taxed at 18 percent. It also suggested that eating out at hotels that have room tariff of more than Rs 7,500 should attract a uniform 18 percent rate instead of any separate category for 5-star hotel, which currently falls under the 28 percent bracket.
With regard to traders, the GoM came up with a two-pronged approach for taxation under the composition scheme.It suggested that traders who want to exclude sale proceeds of tax-free items from turnover can pay 1 per cent GST. However, for those who pay tax on total turnover, the tax rate has been proposed at 0.5 percent.
While a regular taxpayer has to pay taxes on a monthly basis, a composition supplier is required to file only one return and pay taxes on a quarterly basis.