The Goods and Services Tax Council in its 21st meeting came out with a slew of recommendations from raising the cess on motor vehicles to reviewing and reducing the tax rates on 40 items, such as raincoats, rubber bands, brooms and idli/dosa batters.
Most importantly, the GST Council also announced an extension of deadlines for filing the GST returns. Union finance minister Arun Jaitley confirmed this after the council meeting.
Here is a highlight of the meeting held on Saturday in Hyderabad:
The due date for filing GSTR1 form for small businesses for the month of July 2017 has been extended to 10th October 2017. For large businesses, the date is 03rd October 2017. Previously, the date was 10th September, 2017.
The new timeline is as follows-
- For registered persons with turnover more than Rs.100 crore in a state, the due date for GSTR-1 for July 2017 will be 03rd October 2017
- For others, due date for GSTR - 1 for July 2017 will be : 10th October 2017
- GSTR-2 (due date of filing for the month of July 2017) : 31st October 2017
- GSTR-3 (due date of filing for the month of July 2017) : 10th November 2017
- GSTR-4 (due date of filing for the quarter July-Sept 2017) : 18th October 2017
- GSTR-6 (due date of filing for the month of July 2017) : 13th October 2017
The timelines for the next month will be announced later.
The date for filing the transition forms to GST, TRAN-1 has been extended by a month, i.e. October 31st, 2017.
For easier compliance, the council has allowed filing the simplified GSTR 3B for four more months – September, October, November and December.
The window for the GST Composition Scheme option will be re-opened. The due date for the same is 30th September. The Composition Scheme allows small and medium enterprises and start-ups with turnover of less than Rs.50 lakhs to pay tax at a minimum rate, rather than the prevailing GST rate. This facility is not applicable to service providers.
The council also hinted at forming an inter-ministerial panel to look at the technical issues pertaining to the uploading of GST returns on the GST Network.
An important aspect of the brief was the council’s definition of the term “brand”. It said that if a product carries a trademark which was registered on or before 15th May 2017 or even where it was unregistered, but the mark/name allowed exclusivity on account of any reason, then the GST rate on such products would now stand at 5 per cent, instead of the earlier 12 per cent.
What were the key changes:
· No registration for inter-state sale up to Rs.20 lakhs for artisans, folk artists, tribal art and for specified job work.
· The GST rate on khadi materials sold through KVIC stores, and brooms and brushes made of twigs or other vegetable material have been made Nil from the earlier 5 per cent.
· No change in cess on cars with engine capacity less than 1200cc petrol or 1500cc diesel.
· Cess on mid, large and SUV segment cars increased by two per cent, five per cent and seven per cent respectively. No change in cess for hybrid cars.
· GST on works contract for the government reduced to 12 per cent.
· Walnuts, dried tamarind, roasted gram, idli and dosa batters, dhoop batti, dhoop, sari fall, corduroy fabric have been brought down from 12 per cent to 5 per cent.
· Custard powder, plastic raincoats, medical grade sterile disposable gloves, rice rubber rolls for paddy de-husking machines , computer monitors upto 20 inches and kitchen gas lighters have been brought down from 28 per cent to 18 per cent.
· Worked ivory, bone, tortoise shell, horn, antlers and other carving material and articles made thereof, statues and other ornamental articles, tableware, kitchenware, other household and toilet articles – other than those made of porcelain or china, pots, jars and similar articles used for packing ceramic goods have been brought down from 28 per cent to 12 per cent.
· Worked corals have been brought down from 28 per cent to 5 per cent.
What lies next?
· The GST council has said that the tax rates will be reviewed after six months if healthy collection continues.
· Also, the state governments have raised concerns over liquidity issue. Notwithstanding the robust GST collection of Rs.95,000 crores, the unrealised IGST stands at a whopping Rs.37,000 crores.
· The GST Council has now decided to form a committee to look at embedded taxes in exports.
Under Goods and Services Tax, a registered person would be entitled to avail input tax credit paid on his all expenses, procurements of goods, and services unlike the present indirect tax regime. Presently a significant portion of indirect taxes namely central excise and service tax form part of the cost component for a trader. This will not be the case under GST. He will now be able to take credit of all the taxes paid by him.
Illustrative list of day to day expenditures in course of its business on which GST paid shall be allowed as Input tax credit while determining GST liability for the month.
1. Air conditioner
2. Computer & Printer
3. Furniture
4. Office equipment’s
5. Television
6. Advertisement Charges
7. Audit Fees
8. Consumables Paint material & Other Consumables
9. Loading & unloading Charges
10. Printing & Stationery
11. Recruitment Expenses
12. Rent Paid
13. Security Charges
14. Subscription
15. Telephone expenses including mobile phones
16. Traveling Expenses other than Leave Travel concession
17. Repair & maintenance
18. Job Work
19. Labour Charges
However, such input tax credit is not allowed in respect of GST paid on purchase of motor car/vehicle, works contract for construction of immovable property, expense incurred on foods/beverages/outdoor catering and rent a cab etc.
Thus it is important that a registered person while making purchases, incurring any expenses or buying computers/ air conditioners provides its GSTIN to the supplier and ensure that his GSTIN is quoted in the invoice/bill issued by the supplier and credit of the same is shown in the return filed by the supplier.
