Incentivising payments settled electronically under the Goods and Services Tax and slashing rates on over 160 of the 227 items falling in top slab of 28 per cent GST rate to 18 per cent are some of the major proposals set to come up before the all-powerful GST Council as it begins its two-day meet in Assam’s capital Guwahati today.
The two-day meet will see top officers from the state Finance departments get together of Thursday, while Friday will see state Finance ministers attend the meeting that will be chaired by Union Finance Minister Arun Jaitley.
Ahead of the meeting, Bihar Finance minister Sushil Modi, who is also part of the GST Council, hinted at the likelihood of several items in the top GST rate slab being brought under the 18 per cent tax rate.
"Tax rates on 80 per cent of 227 items falling in top slab is likely to be reduced from 28 per cent to 18 per cent in the next GST council meeting. The GST fitment committee has also recommended reducing tax rates from 18 per cent to 12 per cent on a number of goods,” Sushil Modi said at a function at the Bihar Chamber of Commerce in Patna on Wednesday.
A group of ministers, set up to review the rates, will formally ask the council to consider reducing the taxes on a host of products to 12-18 per cent from 28 per cent.
The GST Council is also set to consider steps to ease the compliance burden for traders and businesses. The ministerial panel has pitched for extending the quarterly filing of returns facility to all taxpayers.
Currently, businesses with turnover of up to Rs. 1.5 crore are allowed to file returns and pay taxes every quarter. It also suggested further simplification in return filing process, HSN Code and invoice matching.
Another significant proposal that could come up for the GST Council’s approval is the inclusion of the GST component in the maximum retail price of goods. The proposal comes in the backdrop of consumer complaints that some retailers charge the new indirect tax on MRP of products. The panel, that consists of state Finance ministers, is learnt to have recommended that the MRP be inclusive of the GST component when businesses issue invoiuce to consumers.
The GoM has also suggested doing away with the tax rate distinction between AC and non-AC restaurants not covered under the composition scheme, and tax them at 12 per cent with input credit.
Also, eating out at hotels, which has room tariff of more than Rs. 7,500, should attract a uniform 18 per cent tax rate instead of any separate category for 5-star hotel, the GoM recommended.
In a bid to promote digital payments under GST, the Council could also consider incentivising merchants and traders by providing benefits in terms of credit or exemption within central and state GST.
A merchant could, for instance, get credit for digital payments that can be adjusted against GST liabilities. Consumers, on the other hand, could be incentivised through lower tax when payments are made digitally.
Penalty on delayed GST returns filing could also be reduced to Rs 50 from Rs 100, sources said.