Following are the sops announced for small and medium traders and we have compiled a list for you of items that got cheaper after the new changes.
The GST Council on Friday announced huge changes to the Goods and Services Tax Bill(GST) leading to major tax rate cut of various items. The move was aimed to provide support to exporters and small businesses.
"It's almost three months since GST roll out. Returns have been filed for first two months as well. So, it was a time to deliberate on its effect on various trades and the transition," Finance Minister Arun Jaitley said while addressing the media after the day-long meeting.
Following are the sops announced for small and medium traders and we have compiled a list for you of items that got cheaper after the new changes.
GST Council brings cheer to exporters:
To address the liquidity problem that are being faced by the exporters even after the three months of rolling out of the GST, the Finance Minister's announcement is expected to bring early diwali cheers for them.
The GST Council announced six-month tax relief for exporters. Returns for the month of July and August will be refunded through cheques from October 10 and October 18 respectively, and for the rest of the fiscal, they will carry on their business under an exempted category paying a nominal 0.1% GST.
Finance Minister Arun Jaitley also acknowledged that there has been a blockage in credit of exporters which affects their cash liquidity.
e-wallet for exporters
The Finance Minister also announced the setup of an e-wallet for exporters. "Since GST has no exemptions, for now, all exporters will be given an e-wallet. It will be given a notional amount as advance refund. And on the basis of this credit, firms can pay IGST and GST. And refunds will be offset against this", he said.
Arun Jaitley said that the launch of e-wallet is likely to be on April 1, next year.
Relief to Small and medium traders:
The finance minister said that the GST Council has agreed to allow SMEs with turnover of up to Rs 1.5 crore to file quarterly returns instead of monthly filings. About 90% of the taxpayers will be benefited by this change, he added.
However, taxpayers, who contribute 94-95% of the total taxes, will continue to file monthly returns as usual and pay taxes on a monthly basis.
Jaitley also stated that the majority of taxpayers that have been now under the GST regime have less than Rs 1 crore of turnover and though their tax input is low, the burden of compliance is too high on them. In order to bring them relief, as reported by DNA, the GST Council has decided to increase the limit of composition scheme to Rs 1 crore from current Rs 75 lakh for small businesses.
To break it down further, here's some FAQs regarding the composition scheme:
What is composition scheme?
To provide an easy format to pay GST, the government announced Composition Scheme for SMEs so that they can get rid of tedious GST formalities and pay the tax at a fixed rate of turnover.
Who can opt for the composition scheme?
According to the modifications that are being announced on Friday, now anyone whose turnover is below Rs 1 crore can opt in for Composition Scheme.
However, turnover for special category States, except Jammu & Kashmir and Uttarakhand, limit has been increased to Rs 75 lacs from Rs 50 lakh. The turnover threshold for Jammu & Kashmir and Uttarakhand will be Rs 1 crore.
The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31.03.2018.
What are new rules for composition scheme?
The option once exercised shall become operational from the first day of the month immediately succeeding the month in which the option to avail the composition scheme is exercised.
New entrants to this scheme will have to file the return in FORM GSTR-4 only for that portion of the quarter from when the scheme becomes operational and shall file returns as a normal taxpayer for the preceding tax period.
Who are eligible and who are not?
Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.
What exactly will happen now?
The tax rate for traders of goods in the composition scheme is 1%, and for manufacturers and suppliers of food or drinks for human consumption (without alcohol) is 2% and 5% repectively.
The scheme facilitates small businesses, including eateries, to pay 1-5% tax without having to deal with the three- stage filing process.
Presently, anyone making inter-state taxable supplies, except inter-State job worker, is compulsorily required to register, irrespective of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.
What is the last date of filing return for this year under composition scheme?
The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 will be extended to November 15, 2017. Also, the last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, is the same, November 15.
Revised rates led to lower price of 27 items:
Finance Minister Arun Jaitley said that the Council also decided to cut GST rate on 27 common use items
Following is the list of 27 items that are set to become cheaper:-
Food items:
Mangoes sliced dried - GST rate cut from 12% to 5%
Khakra and plain chapati rate cut from 12% to 5%
Unbranded Namkeens will be taxed under 5% now from 12%
Unbranded Ayurvedic, Unani, Siddha, Homeopathy medicines - from 12 percent to 5 percent.
Stationery:
Poster Colour - from 28% to 18%
Modelling paste for children- from 28% to 18%
Plastic waste, parings or scrap - from 18% to 5%
Rubber waste, parings or scrap - from 18% to 5%
Hard Rubber waste or scrap - from 28% to 5%
Paper waste or scrap - from 12% to 5%
Textile:
Nil Sewing thread of manmade filaments, whether or not put up for retail sale - from 18 percent to 12 percent.
All synthetic filament yarn, such as nylon, polyester, acrylic, etc. from 18% to 12%
All artificial filament yarn, such as viscose rayon, Cuprammonium - from 18% to 12%
Sewing thread of manmade staple fibres - from 18% to 12%
Yarn of manmade staple fibres - from 18% to 12%
Real Zari - from 12% to 5%
Other items:
All goods falling under heading (other than those of marble and granite or those which attract 12% GST) - from 28% to 18%
Cullet or other waste or scrap of Glass - from 18% to 5%
Fittings for loose-leaf binders or files, letter clips, letter corners, paper clipsand others from 28% to 18%
Plain Shaft Bearings - from 28% to 18%
Parts suitable for use solely or principally with fixed Speed Diesel Engines of power not exceeding 15 HP - from 28% to 18%
E-Waste - from 28% to 5%
Biomass briquettes - from 18% to 5%
Other processes that are much simpler now:
After assessing the readiness of the trade, industry and Government departments, the GST Council decided that registration and operationalization of TDS/TCS provisions will be postponed till March 31, 2018.
The e-way bill system will be introduced January 1, next year with effect from April 1, 2018 to give traders more time to familiarise themselves with the new tax regime.
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