Three months after the rollout of the goods and services tax (GST), the GST Council has on Friday further simplified the new tax regime in a bid to ease the transitional pain further.
The steps included relief to small and medium businesses on filing and payment of taxes, easing of rules for exporters and cut in tax rates on 27 items.
The GST has become "even simpler" after the GST Council's recommendations, said Prime Minister Narendra Modi on Friday night. He claimed that the steps were in line with the government's constant endeavour to safeguard citizens' interests and ensure India's economy grows.
Experts feel the steps announced are in right direction though some argue for further liberal rules for MSMEs.
Given below are some of their quotes decoding the decisions:
Chandrajit Banerjee, Director General, CII
The Small and Medium-sized Enterprises (SME) sector compliance will greatly improve as limit for composition scheme has been increased to Rs 1 crore. Now for SMEs with annual turnover of Rs 1.5 crore will be allowed to file quarterly returns, this will be a big relief to the small-scale players. Deferment of Reverse Charge Mechanism (RCM) is welcome as it encourages registered taxpayers to continue sourcing from small and unregistered taxpayers.
The decision to bring down rate for AC restaurants to 12 percent and reduction of tax slabs for around 60 items to 5 percent from 12 percent will help boost household spending and further economic growth. Raising of turnover for composition scheme from Rs 75 lakhs to Rs 1 crore and deferment of E-way bill provisions till April 2018 are indeed a big relief which will help trade and industry in getting adjusted to the GST compliances.
Aditya Singhania, Deputy General Manager (DGM), Taxmann
The rates of around 60 items were cut as per the scrutiny and observation of GST Rate Fitment Committee. This should not be looked merely as a rate cut but it actually brings relief for mass consumers which felt inflationary pressure as was observed from the Consumer Price Index (CPI) for the month of August, 2017 which increased to 3.36 percent as compared to 2.26 percent of July, 2017. The reduction in rates of most of the goods and services are certainly the mega Diwali gifts which the GST Council could have put into the kitty of the consumers of India just a week ahead of Diwali.
Sachin Menon, Partner and Head, Indirect Tax, KPMG in India
The government has addressed the immediate concerns of 90 percent of tax payers who contribute approximately 10 percent of the tax collection by relaxing the compliance norms. Hopefully the concerns of minority taxpayers who pay 90 percent of the tax revenues, will hopefully be addressed in next council meeting.
The 35 percent abatement on GST payable on existing car leases is indeed welcome but is not good enough as still the lessee will end up paying 28-30 percent GST as against 15 percent service tax in the earlier regime.
The decision to address the concerns of exporters by granting instant refunds and exemption to inputs will indeed give a positive message that government is proactive in resolving the teething issues. One needs to wait and see how it will get implemented.
Abhishek A Rastogi, Partner, Khaitan & Co
The Government has discussed lot of issues related to exporters, compliances including reverse charge, enhancement of limits for composition scheme from 75 lakhs to Rs 1 crore and the tax rates. This is a welcome move as the government is trying to address lot of issues erupting in the first hundred days of the GST implementation. The Guidance to the fitment Committee is very interesting. The benefits to the exporters in the form of e-wallet, interim benefits by manual filing and payment of 0.1 percent are welcome.
The quarterly filing of returns gets extended to the extent of 1.5 crores of turnover. It needs to be seen that how the other issues which have reached different courts in the country are addressed in the days to come. Certainly, the need of the hour is to provide impetus to the business growth and it appears that the government is openly looking into the concerns of the businesses.
Divyesh Lapsiwala, Indirect Tax Partner, EY India
These are strong positive decisions in order to reduce compliance burden on taxpayers. Deferral of provisions like TDS TCS e way bills are welcome move as taxpayers may not be fully ready from a system and process standpoint to deal with these significant operational changes. The proposal to defer reverse charge compliance is also very important and necessary relaxation provided, as it was potentially resulting in a bias against small service providers. Complete clarity is still awaited on compliances for the month of July August and September which will need to be done by all taxpayers.
The government should encourage taxpayers to use this period for extensive testing and stabilization of revenue reporting and credit matching. This will reduce the rigor and complexity and at once provide a platform to be better prepared for the expected compliances.
B C Bhartia, National President, Confederation of All India Traders (CAIT)
Enabling Composition Dealers to make inter-state sales is a bold decision and will enable small traders to remain competitive. Increase in composition scheme upto Rs 1 crore, deferment of e-way Bill and Reverse Charge Mechanism will boost business sentiments. Quarterly return for persons having annual turnover up to Rs 1.5 crore will be give much relief to small traders nd offload from monthly tax compliance. The waiver of IGST to exporters will certainly boost exports. The reduction of tax rates on 27 items will lower the cost of such goods.
Priyajit Ghosh, Partner, Indirect Tax, KPMG in India
With measures to ease liquidity for exporters, improving ease of compliances for small tax payers, deferment of certain comparatively onerous provisions such as e-way bill, reverse charge and rationalisation of rates including man made yarn, the GST council meeting is a shot in the arm of the economy over this festive season.
Saloni Roy, Senior Director, Deloitte Haskins & Sells LLP
The GST Council has provided much needed relief to Micro, Small and Medium Entreprises (MSME) sector (with a turnover not exceeding Rs 1.5 crores) by allowing such assessees to file a quarterly return, instead of prescribed monthly returns. Relief has also been given to exporters by announcing that refunds shall be given from 10th October, which would resolve cash flow issues faced by exporters. Deferment of provision related to reverse charge liability in case of purchases from unregistered seller will also assist the industry positively.
Further, threshold limit for eligibility as a composition dealer has also been increased to Rs 1 crore from the previously prescribed Rs 75 lakhs, which will enable more small scale assesses to avail the benefits of composition scheme.
Harishanker Subramaniam, National Leader, Indirect Tax, EY India
The government demonstrated its responsiveness in addressing GST issue on a day of significant decisions. It is a big relief for exporters with exemption till March, refunds of July/ August by October 2018 and solution of e-wallet by April. It is a big relief to MSMEs with an increase in threshold to Rs 1 crore, quarterly returns/ payments for taxpayers under Rs 1.5 crores with presumptive credits available in such cases for others.
There have been some rate reductions, though not very significant on expected lines. Car lease has received partial relief. Clarity is awaited on Area Based Exemptions and Advance Ruling Authority which should be done hopefully by 8-9 November Council meeting, if not earlier.
Harpreet Singh, Partner, Indirect Tax, KPMG in India
Increasing the composition threshold from Rs 75 lakhs to Rs 1 crore and changing the periodicity of filing return and paying tax from monthly to quarterly for dealers with turnover upto Rs 1.5 crores, are definitely steps in the right direction. This would substantially ease the compliance for the SMEs sector and settle their nerves.
Quarterly return filing means that the immediate need to invest in IT infrastructure for monthly online filings is no more required, as SMEs can continue to get the quarterly compliances done through their Chartered Accountants (CAs) and accountants using their IT infrastructure. Thus, reducing their GST compliance cost. Further, increase in composition scheme threshold would imply that now more dealers with turnover between Rs 75 lakhs and Rs 1 crore can opt for this simplified compliance scheme, where tax needs to be paid at flat rate and return filing is quarterly.
Praveen Khandelwal, Secretary General, Confederation of All India Traders (CAIT)
It is noteworthy to mention that from an implementation point of view, the GST experience for small traders on the ground has been onerous so far but we hope that situation will improve from now-said both leaders. There are issues with the non-performance of the GST portal and the introduction of the Reverse Charge Mechanism for the first time.
Overlapping sundry laws with GST law and procedure has also led to some degree of confusion across the country. The problem has been compounded due to inadequate knowledge about compliance procedures and the lack of information in certain quarters which has led to different traders following different compliance formalities. The step of the GST Council will hopefully mitigate all these problems.
T S Kalyanaraman, Chairman and Managing Director, Kalyan Jewellers
We welcome the decision to extend the provisions of PMLA from the present limit of Rs. 50,000 to Rs. 2,00,000 in the case of jewellery purchases. This decision will boost the overall sentiment in the trade.
Updated Date: Oct 07, 2017 10:49 AM