
GST Council revised rates for as many as 66 items on Sunday after discussions in the 16th GST meeting in New Delhi.
Finance Minister Arun Jaitley said that recommendation to revise rates for a total of 133 items had been made out of which the GST rates were reduced for 66 items.
What's getting cheaper?
Most of the items on which the GST rates have been reduced are of use for the common man. They include cashew nut, sauces, pickles, insulin, children's colouring and drawing books, cutlery.
GST rates were also revised for computer printers, tractor components. Cinema tickets under Rs 100 would be taxed at 18 percent, while above Rs 100 would be charged at Rs 28 percent.
Here's a detailed list of revised GST rates:
As the July 1 rollout nears, worries are growing for traders who do not have complete clarity on what changes GST will bring.
The government has even launched a Twitter handle to answer the queries of small traders who will have to change the way they file taxes.
The very fact that the move to GST involves complete overhaul of the indirect tax system means impact on businesses, at least during the transition period, will be huge.
Under-preparation: Though the GST law has been under discussion some states are, in fact, yet to notify their laws. With a month to go before the roll-out, there is still confusion about the rates. Besides, many companies are yet to put in place new systems and software such as ERP (enterprise resource planning).
Some big companies: even a few public sector companies - are still in the process of floating tenders for hiring financial consultants. Any under-preparation will lead to non-compliance with the tax laws and have economic consequences such as delayed availability of input credit and loss of business.
Compliance cost: GST is a technology-driven system where every transaction - from invoicing to payment of tax - has to be done digitally. The government has invested heavily in building the technology ecosystem. But companies and other taxpayers will also have to invest in proper ERP and other software or hire third-party software providers. Here also, technology alone won't be enough, as companies need to capture input tax credits on their own and then reconcile with suppliers' returns to ensure that there is no mismatch. If there is, their tax credits will get blocked. The businesses will also have to hire professionals for help.
Challenges in using technology: The whole GST ecosystem is based on an IT-enabled platform, and its success in the transition phase will depend on how well taxpayers adapt to it. The fact that many small traders/entities still file returns and pay taxes manually means the shift from offline to online will itself be a big disruption for them. Vinay Sethi, Head, Market Development, Tax and Accounting, South Asia, Thomson Reuters, says Indian taxpayers are not keen to use technology the way GST requires them to.
In the early days, it is likely that errors in (untested) IT systems or ERP software may lead to delay in filing of returns or payment of taxes.