GST from July 1; deadline extended for first set of returns; lotteries to be taxed at 28% and 12%; most rules finalised as slog overs begin
Relief for hotels as 28 percent rate will apply for room tariffs above Rs 7,500 a night, more deliberations ahead on e-way bills as focus shifts to implementation.
The Goods and Services Tax (GST) Council on Sunday extended the deadline for filing the first set of returns, a move that will likely soothe frayed nerves of millions of traders ahead of the new indirect tax system’s rollout from July 1.
The Finance Minister Arun Jaitley-headed GST Council, however, did not announce major changes in rates, but tweaked levies for the hospitality sector giving slight relief to five-star hotels.
The council fixed two GS T rates for lotteries—12 percent for government and 28 percent for government-authorised private draws, Jaitley told a news conference after the council’s meeting.
“We don’t have the luxury of time to defer the implementation of GST,” Jaitley said. “The official launch of GST on midnight of June 30 and July 1 at a function in Delhi”.
The council also offered a respite to the hospitality sector. A 28 percent GST rate will now apply for room tariffs of above Rs 7,500 a night from the earlier threshold of Rs 5,000. Restaurants in five-star hotels will also be taxed at a GST rate of 18 percent, down from 28 percent earlier and identical to stand-alone air-conditioned restaurants.
The Council also took stock of the preparedness for rolling out the new tax system that promises to stitch together a common national market, dismantle fiscal barriers among states and subsume a patchwork of local and central duties such as excise, value added tax, octroi and service tax into a single levy.
Under GST, taxpayers are required to file returns on “onward supplies” (goods sold or services provided) and “inward supplies” (goods or services bought). These returns are necessary for seamless implementation of the input tax credit system.
Input credit means at the time of paying tax on output, a producer, trader or service provider can reduce the tax already paid on inputs.
The earlier rules required taxpayers to file returns for onward and inward supplies by the 10th and the 15th of every month.
On Sunday, the council eased rules GSTR 1 (onward supplies) and GSTR 2 (inward supplies) for July and August to ease taxpayers’ anxieties.
Under the new system, taxpayers will have to make a self-declaration under a new form 3B for the month of July by August 20 and for August by September 30. This will give tax payers extra time of about a month to file returns without worrying about penalties and fines.
Industry bodies and traders have repeatedly sought more time to enable glitch-free filing of returns, minimise erroneous entries and the get accustomed to the GST Network (GSTN).
GSTN is a portal-driven IT backbone created to enable real-time taxpayer registration, filing returns, handle invoices, execute inter-state tax settlements, and connect states for two-way data flow.
It is equipped to handle 2.6 billion transactions every month from an estimated 8 million GST tax payers. It can scale up to handle double the volume (5.2 billion transactions a month) and upto 13 million tax payers, without any change.
“The state of readiness of GSTN was taken up. So far 65.6 lakh ( 6.56 million) have already taken their provisional registration. THis is 81.1 percent of the 80.91 lakh (81 million) assessees as per the old system,” Jaitley said.
GSTN has been carrying out pilot runs of the portal’s since May 1, through identified 3,000 tax payers who have migrated and enrolled into the new system, who have been uploading invoice data, filing returns, and paying taxes to test the system.
Officials said that the first round of beta or trial testing has been done and glitches have been ironed out.
It also approved the draft pending rules related advance ruling, appeals, assessment, anti-profiteering, and funds settlement.
On the e-way bill rules, Jaitley said further deliberations will continue. “Final rules will be framed after consensus,” he said. Till then an alternate rule has been approved authorising existing system in the states to continue.
Under draft GST rules, ferrying worth more than Rs 50,000 within or outside a state will require securing an e-way bill by prior online registration of the consignment.
To generate an e-way bill, the supplier and transporter will have to upload details on the GSTN portal, after which a unique e-way bill number (EBN) will be made available to the supplier, the recipient and the transporter on the common portal.
Depending on the distance covered or needed to transport the good, the EBN will remain valid for one to 15 days—one day for distances upto 100 kms and 15 day days for distances of more than 1,000 km.
Till now rates of more than 1200 goods and 500 services have been fixed. In its last meeting on June 11, the Council reduced tax rates on 66 items including ketchup, instant food mixes, pickles, tractor components, computer printers and insulin.
The council also finalised the rules related to anti-profiteering. An ‘anti-profiteering’ clause has been provided in the Centre GST (CGST) and State GST (SGST) laws, to ensure that business passes on the benefit of reduced tax incidence on goods or services to the consumers.
Such a framework will ensure that companies don't arbitrarily raise prices of goods just before or after the implementation of GST from July 1.The Centre has maintained that new tax rates will not push up inflation and the body will be keep a check price rise caused by profiteering.