GST Council cuts rates on 29 items, 54 services; decision on simplifying filing process pending

19 Jan 2018 Evaluate

Days ahead of the Union Budget for 2018-19, the all-powerful Goods and Services Tax (GST) Council, at its 25th meeting, has decided to cut tax rate on 29 items and 54 categories of services with effect from 25 January. It also decided to divide Rs 35,000 crore IGST collections between centre and states, in order to help tide over the revenue shortfalls being faced by most states. However, the council has not yet made any decision regarding simplifying the process of GST filing. At its next meeting, it may also consider the issue of bringing items like crude oil, natural gas, petrol, diesel, ATF and real estate within the ambit of new tax regime.

The Council, headed by finance minister Arun Jaitley and comprising representatives of all states, cut GST rate on second-hand medium and large cars and SUVs from 28 percent to 18 percent and on other old and used motor vehicles to 12 percent. Besides, tax on diamonds and precious stones was slashed to 0.25 percent from current 3 percent. While tax rate for bio-diesel was slashed to 12 percent from 18 percent, that for public transport buses run on environment-friendly bio-fuels has been reduced to 18 percent from 28 percent previously. Moreover, the rate on sugar-boiled confectionery, drinking water packed in 20 litre bottles, fertiliser-grade phosphoric acid, bio-diesel and drip irrigation system has been reduced from 18 to 12 percent. The rate on tamarind kernel powder, mehendi paste in cones and domestic LPG supplied by private distributors has been reduced to 5 percent from 18 percent. Services relating to admission or conduct of examinations provided to all educational institutions, entrance fees for entrance examination and for transportation of students up to higher secondary schools will also be exempt from taxation.

In a bid to ease compliance burden, finance minister Arun Jaitley has said that the Council veered around to the idea of registered entities continuing to file the return in GSTR 3B Form while moving to a system where supplier invoice captures details of the transaction. He also stated that the GST provision requiring transporters to carry an e-way bill, when moving goods of over Rs 50,000 in value between states, will be implemented from February 1 to check rampant tax evasion. The minister further indicated that as many as 15 states have decided to implement the provision for intra-state movements as well. Besides, he said that after GST rollout from July 1, the requirement of carrying e-way bill was postponed pending IT network readiness. He pointed out that once the e-way bill system is implemented, tax avoidance will become extremely difficult as the government will have details of all goods above the value of Rs 50,000 moved and can spot the mismatch if either the supplier or the purchaser does not file tax returns.

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