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GST Council eases rules for SMEs, exporters; cuts tax rates of 27 items

09 Oct 2017 Evaluate

Providing relief to thousands of small and medium enterprises (SMEs) and exporters, the Goods and Services Tax (GST) Council, three months after the rollout of the new indirect tax regime has made sweeping changes on filing and payment of taxes, by easing rules for exporters and cutting tax rates on more than two dozen items. At its 22nd meeting, GST Council, headed by Finance Minister Arun Jaitley, raised the turnover threshold composition scheme to Rs 1 crore from Rs 75 lakh, along with allowing quarterly filing of returns for businesses with turnover up to 1.5 crore .

Under the composition scheme, businesses pay a fixed rate to avoid GST paperwork. The higher thresholds will ease the compliance burden and also reduce the filing load on the system. In composition scheme, taxpayers are classified under three categories based on the GST rates they pay - traders pay 1% GST, manufacturers 2% and 5% for suppliers of food or drinks for human consumption (without alcohol). Service providers cannot opt for the composition scheme. Moreover, taxpayers which are exempt from composition scheme but annual turnover up to Rs 1.5 crore will file their GST returns on quarterly basis instead of the current provision of monthly filings.

The Council has decided to clear all tax refund claims of exporters for July by October 10 and for August by October 18. It introduced a 0.1% GST rate for merchant exporters, offering relief from the full applicable GST rates on their procurements. Moreover, exporters will get Interstate GST (IGST) relief till March 31, 2018. From April 1, the government is planning to launch an e-wallet facility for the exporters to give them refund for GST paid which will solve their liquidity problems.

The goods which saw a decline in GST rates include sliced dried mangoes (5%), khakra and plan chapati (5%), ICDS food packets (5%), unbranded namkeen (5%), unbrabded ayurvedic medicines (5%), plastic waste (5%), rubber waste (5%), paper waste (5%), manmade yarn (12%), flooring stones expect marble and granite (18%), stationary items (18%), clips (18%), diesel engine parts (18%), pumps parts (18%), and e-waste (5%). Moreover, job works related to zari embroidery, imitation jewellery, food items, printing, and government contracts involving high element of labour will all attract GST at the rate of 5%.

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