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40 items to cost less under GST, cess to go up for Hedonic Cars, due dates for filing returns revised

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Hyderabad – The GST Council has increased the cess on the motor vehicles majorly mid-sized cars, large cars and sports utility vehicles (SUVs) by 2%, 5%, and 7% respectively. Earlier it was proposed that an entire 10% cess would be charged, but the council went ahead with the cess on respective class of motor vehicles.

The overall tax incident has been kept within the 50% bracket. This incident is expected to take the overall tax incidence to 45%, 48% and 50% for mid–sized cars, large cars and SUVs respectively.

The various industry experts had pitched in for a differential hike, i.e., a lower increase in the cess for the mid- sized cars as they felt that it would have a significant impact on the middle-class families. The council in its last meeting had approved the rise in cess from 15% to 25% altogether, which was strongly opposed by the industry. There has been no change in the cess rates for the hybrid vehicles such as 13 seaters and the small cars.

The car rates had significantly come down by as much as ₹ 3 lakhs as the tax rates under the GST were lower than the pre-GST days; hence to fix this anomaly, the council has raised the cess on the cars now.

The Finance Minister, Mr. Arun Jaitley briefed the media after the second review committee for the GST where it was decided that the tax rates of over 40 goods would be slashed. The council has brought down the rates of goods such as Walnuts, broom, clay idols, custard powder, idly-dosa batter, rubber bands, raincoat, dhoop batti, computer monitors, table and kitchenware, prayer beads, etc. Khadi fabric which is sold at the KVIC outlets and stores have been completely exempted from the GST.

Food items that are not branded are right now exempted from the GST whereas the branded and the packaged food items attract as much as 5%. Thus it has also been seen that the companies are deregistering their brands to avoid GST being levied. This issue was discussed at the council meeting.

As the companies were trying to avoid 5%, the council came up with a decision that any brand registered on or after 15th May 2017, irrespective of whether it de-registered itself later, will face a tax rate of 5%. This issue was mostly seen in the category of pulses, cereals, and flours. The council also said that any mark or name would also be counted as a registered brand and thus face a 5% GST. This could bring the local and various in-house brands of large retailers under the 5% tax bracket.

On the other hand, there was a huge relief for the handicraft makers who sell to the other states as they will not be required to register if the annual turnover has been below ₹ 20 lakh.

The council, in the meeting that happened also decided that it would be setting up a dedicated committee of a group of ministers who would frequently review the functioning of the GSTN. GSTN is the goods and service network which is considered the IT back bone of the GST. The council would periodically meet the committee of ministers to get a follow up on the smooth transition on GSTN.

It was also mentioned in the council that the revenues have been robust with more than 70% of the tax payers have already filed their returns. Apart from that the council reviewed the implementation of the new tax reform, GST and organized a detailed presentation on the migration of the tax payers from the old reform of VAT to the new reform of GST.

Towards the end, the council gave another breather to the industry as people had been struggling to meet the return filing as per the deadline. This was mostly due to the glitches that the GSTN portal had been facing because of the heavy traffic. The GSTR-1 filing which was earlier extended to 10th of September has now again been revised to 10th October for the smaller companies and 3rd October for the large companies. Also to make the compliance perspective a bit easy, the council has now allowed the businesses to file a simplified GSTR-3B for another four months, i.e., till December.

Mr. Hasmukh Adhia who is the revenue secretary said that all the companies that have an annual turnover of over ₹ 100 crores would have a deadline of October 3 for filing GSTR-1 and the rest of the lot can file the GSTR-1 till 10th of October. Similarly, for GSTR-2 and GSTR-3, the filing would be possible till 31st October and 10th November respectively.

The date for GSTR-1, 2, 3 is expected to be communicated later, said Mr. Adhia. Till Friday, 8th September 2017 as many as 45 lakh GSTR-3B, 17 lakh GSTR-1 and over 13 crore invoices had been uploaded on the GSTN portal.

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A pure vegetarian, who believes in reincarnation & law of karma and follows the philosophy of “Live and let others Live” because all living beings have equal right on the resources of this planet. Being from a finance background, he loves to write about business aspects of the trends.

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