About 100 days after its tryst with the new Goods and Services Tax regime began, the GST Council has lowered the rates on 27 items. The Council has done well to lower GST rates on certain goods including dried sliced mango, khakhra, unbranded namkeen and, more importantly, yarn and sewing threads to soothe the textile industry that has been be a major jobs provider. Prime Minister Narendra Modi has described the relief as arrival of Diwali before Diwali.
The decision to do away with the requirement of filing three monthly returns and an annual return to only a quarterly return for firms with a turnover of 1.5 crore is welcome because it will ease the burden of compliance on small businesses. Some of that burden has, no doubt, been reduced by the decisions taken by the GST Council headed by Union Finance Minister Arun Jaitley. Also, the reverse charge mechanism under which receivers of goods and services are liable to pay tax on supplies by unregistered vendors has been deferred till March 31, 2018. This, along with the creation of a proposed âe-walletâ facility from April 1 in the form of an advance refund or notional credit that can be used to pay IGST and GST on inputs may somewhat address the severe working capital blockage currently being experienced by exporters. Surely, it is an attempt to woo back the trading community. The announcement has also exempted jewellers from reporting data on buyersâ purchases of over 50,000.
The exemptions to small businesses and to exporters will elicit cheers. However, there still is need for the new tax regime to be made simpler because of compliance hassles. There is need to strive for âease of doing businessâ by simplifying the tax regime by reducing multiplicity of taxes. The new regime shows that out of 54 lakh registered entities, only about 10,000 have contributed two-thirds of the total 94,000 crore mopped up in July. That makes a case for investigation and the best way is to keep the tax regime uncomplicated and simple. The lowering of GST rates on 27 items should spur fresh confidence among small firms and help expand the tax base. The announcement of faster tax refunds should be re-assuring. The suspension for six months of the payment of integrated GST (IGST) on inputs used for exports will bring immediate relief bringing jubilation amongst exporters. The government needs to act fast to provide relief on all the grey areas. The impression should not go around that the GST decisions to provide relief to different sections is aimed at the forthcoming elections in some states.