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After trimming 28% bracket, here are 5 things GST Council might do today

In the first half of the meeting in Guwahati, the Council decided to trim the 28% bracket to just 50 items, against 227 currently

GST. Illustration: Ajay Mohanty
Illustration: Ajay Mohanty

The GST Council on Friday decided to keep only 50 items, mostly demerit, sin and luxury goods, in the top 28 per cent tax bracket, Bihar Deputy CM Sushil Modi said.

In the first half of the meeting taking place in Guwahati, the Council decided to trim the 28 per cent slab to just 50 items as against 227 items currently. 


The second half will see discussions on easing compliance burden on taxpayers and making the composition scheme more attractive.

Here are the other developments expected from the meeting: 

1) Rate cut for AC restaurants: Those in the restaurant business are hoping for a much-needed relief to come their way. (Read more here)

The GST Council meeting is likely to witness deliberations on a number of topics, including rate cuts on A/C restaurants from 18 to 12 per cent.

The Federation of Hotels & Restaurants Association of India on Thursday said the body met with GST Council members, including state finance ministers, to press for rationalisation of tax rates for the industry. (Read more here)

"We have met the GST Council, which was represented by the Union Revenue Secretary Hasmukh Adhia. We have also met a couple of state Finance Ministers separately and put forward our demands," Federation of Hotels & Restaurants Association of India (FHRAI) President Garish Oberoi told Press Trust of India.

The association is seeking reduction of GST to 12 per cent on all categories of restaurants from the differential rates of different segments, he added.

2) Lower rate under composition scheme: The composition scheme that allows a flat rate of tax and easier compliance may be eased further. The Council may increase the threshold for eligibility to Rs 1.5-2-crore annual turnover, from Rs 1 crore at the moment. This will require an amendment in the law. "Amendment in the law will be needed, as the Act currently provides for a limit of Rs 1 crore for the composition scheme. We will not do it through an ordinance, but by amendment, which may take about two months," said another official. (Read more here

A flat 1 per cent rate for manufacturers and restaurants will be considered, against the current 2 per cent and 5 per cent, respectively. For traders, a lower rate of 0.5 per cent in the case of a cumulative turnover of exempted and non-exempted goods and 1 per cent for non-exempted goods may be allowed. Allowing inter-state sale under the composition scheme will also be taken up.

3) Quarterly return filing for all taxpayers: The Council might also allow quarterly return filing for all taxpayers, with monthly tax payment. This was suggested in a report prepared by the group of ministers (GoM), led by Assam Finance Minister Himanta Biswa Sarma.(Read more here

In its last meeting, the Council had allowed quarterly return filing and tax payment for those with an annual turnover of up to Rs 1.5 crore.

"Keeping in mind the matching of returns, why not allow quarterly return filing for all taxpayers? If not all, at least for those with annual turnover of Rs 5 crore or Rs 10 crore should be allowed easier compliance through quarterly filing," said a government official on the condition of anonymity.

4) Conceptual discussion on inclusion of real estate in GST: A presentation will be made on the inclusion of real estate in the GST. The approval of states is key as stamp duty and registration fees on property are the exclusive domain of states according to law and will need an amendment in the Indian constitution. (Read more)

The Indian Stamp Duty Act, 1899, empowers states to collect and impose stamp duty. These vary across states, currently in the range of 3-10 per cent.

"The discussion on real estate will be at a very conceptual stage. Pros and cons will be discussed. After all, states will need to surrender their power to tax, even though revenue may not be a big concern," said another government official.

5) Reduction in late filing fees: A reduction in late filing fees to Rs 50 per day, against Rs 200 at present may also be considered.