India Inc welcomes GST rate cuts, simplification in returns filing

With around 93 per cent of the registered taxpayers set to benefit from the GST Council's decision to allow quarterly return filing for businesses with turnover of up to Rs 5 crore, India Inc not only foresees increased compliance but also improved ease of doing business. After all, micro and small enterprises have long complained about the tedious compliance burden of monthly filing under the new tax regime.

"The decisions relating to simplification of returns and especially keeping the interests of small taxpayers are noteworthy. This would facilitate ease of doing business both for small and large taxpayers," said Ficci President Rashesh Shah, adding that the decisions would increase compliance, widen the tax base and are in the right direction to achieve the objectives of GST.

In a similar vein, the Confederation of All India Traders (CAIT) said in a statement that the single page return form to be filed quarterly for traders having turnover up to Rs 5 crore is a bold step, which will ease miseries of traders. They will have to, however, pay taxes monthly.

To remind you, last October, the government had allowed businesses with an annual turnover of up to Rs 1.5 crore to file returns quarterly, setting off a clamour for the benefit to be extended to bigger enterprises in the MSME sector.  

According to the Finance Ministry, quarterly return shall be similar to main return with monthly payment facility but for two kinds of registered persons - small traders making only business-to-business and business-to-consumer enterprises supply. For such taxpayers, two simplified returns - Sahaj and Sugam - have been designed. "In these returns details of information required to be filled is lesser than that in the regular return," the Ministry said in a statement.

The GST Council on Saturday also announced the biggest GST rate cut since last November. The levy was slashed on a whopping 88 items, including white goods, footwear, sanitary napkins, fortified milk and handicrafts. This, incidentally, was interim Finance Minister Piyush Goyal's first GST Council meeting since he took charge in May.

"This is a big step towards encouraging menstrual hygiene among young girls and women as scrapping of GST from sanitary napkins will make napkins more affordable and more women will be able to use them," said Pinky Reddy, President, Ficci Ladies Organisation (FLO).

Consumer appliance maker Usha International's CEO, Dinesh Chhabra, appreciated the reduction in the GST rates - from 28 per cent to 18 per cent - on food grinders, mixers, storage water heaters, water coolers, water heaters, electric ironing machines, among others. "These are basic appliances and are required in every household on a daily basis. This move ahead of the festive season will certainly bring cheer to consumers and lead to a spur in the growth of the appliances category," he explained.

In fact, according to Harpreet Singh, Partner - Indirect Tax, KPMG, the rate rationalisation on so many products was nothing short of being akin to the annual budget announcements. Clearly, the Modi government is beginning to pull out all stops ahead of the general elections coming up next year.

Singh also pointed out that the rate cuts on handicrafts items such as deities made of stone, marble and woods, phool jharoo, etc, was a long pending demand of the dwindling sector, which had been further hurt by its inclusion in the GST net. "Exemption from GST may provide much needed impetus to the industry, which is a key contributor to rural employment," said Singh, adding that the facility of filing quarterly returns would definitely reduce the compliance burden of small dealers and assist them in channelising their energy in doing business rather than worrying about monthly tax filings.

According to Ernst & Young Services India tax Partner Abhishek Jain, the 28th GST Council also brought cheer to hotels and oil companies. "Big relief for hotels as GST rate of 28 per cent would not apply if the actual tariff value is less than 7,500 even though the published tariff may be more than 7,500. This will also ease the IT systems for hotel players," he said, adding, "Reduction in GST rate of ethanol for use by oil companies to 5 per cent is, again, welcome as major petroleum products are outside GST and this would help reduce their cost".

"While rate rationalisation would definitely bring cheer for the industry and consumers, what would be interesting to see is how the government would try and compensate the revenue loss on account of tax rate reductions," Singh added.

According to The Times of India, The rate reduction along with several clarifications will leave the Centre and states poorer by Rs 8,000-10,000 crore on an annual basis. However, at a press meet on Saturday, Goyal reportedly said that compliance buoyancy and higher consumption will not only boost economic growth and employment, but also make up for the revenue loss. He added that the rate cuts will benefit 125 crore people.

With PTI inputs