State finance ministers emphasised on the need to have quarterly returns, lesser items in 28 per cent tax slab and a simplified composition scheme before the start of the 23rd GST Council meeting on Friday in Guwahati. Ministers also said that this is the right time to include real estate, petrol, alcohol under the indirect tax regime.
Delhi’s Finance Minister Manish Sisodia said tax rates should have been set lower from July 1 itself as higher rates encourage black marketing. “I have said that 28 per cent tax rate means you are encouraging black marketing. Secondly there are some issues which need wide discussion like composition scheme. The scheme worked successfully in the VAT regime but if we try to extend it to SMEs then I think there’s a need to think separately about SMEs in GST structure. All these issues cannot be resolved through composition scheme,” he said.
On returns filing, Sisodia said there is need to have quarterly returns filing. “I have always said it to make it quarterly filing. The current return filing system has created confusion among businesses,” he said.
Sisodia added that there is a need to bring real estate and alcohol under GST. “I have always said bring real estate in GST because if you put 28 per cent in construction activities and then suddenly it goes into a black hole because there’s no counting of where that is going…when you talk of one nation, one tax, then I think everything should be brought under GST. First bring real estate and liquor,” he said.
“Jis din liquor ko aap layenge, us din bade bade surmao ke liquor ke karobaar question mein aayenge (the day you include liquor under GST, many big businessmen would be under question),” he said.
Puducherry Chief Minister V Narayansamy said the cap for GST rate should be 18 per cent. He added that the current procedure adopted for filing returns is “cumbersome”. “Common man consumption goods especially daily use items are 28 per cent like construction industry, toiletries. Common man is affected, GST was brought to simplify procedures and to facilitate common people to purchase items,” he said.
Haryana’s Finance Minister Captain Abhimanyu said the meetings are not related to elections. “The meetings cannot be related to any election because GST Council is represented by states and Centre. Same spirit of unanimity should continue,” he said.
Proposal to have quarterly returns filing and monthly tax payments for all taxpayers, rationalisation of items in the 28 per cent tax slab, a flat rate for all categories of composite dealers, a uniform tax rate of 12 per cent for AC/non-AC restaurants and a discussion paper on bringing real estate in the ambit of GST is a part of the 23rd GST Council meeting being held in Guwahati today.
The proposal to have monthly tax payments and quarterly returns filing for all taxpayers was discussed in the previous GST Council meeting as well, following which assesses with annual turnover below Rs 1.5 crore were allowed to pay taxes and file returns on a quarterly basis instead of earlier monthly system starting from October-December quarter. The Centre, however, had opposed the idea saying that the GST design is such that the tax could not be paid without filing the return.
The Council will also consider lowering tax rates on 100-150 items in the 28 per cent tax bracket such as handmade furniture, plastic products and daily use items like shampoo. The tax bracket of 28 per cent is likely to be retained only sin and luxury goods such as pan masala, tobacco, perfumes, lottery and motorcars.
Apart from these proposals, the Council will take a final call on the recommendations of the GoM pertaining to the composition scheme. The panel has recommended an increase in the annual turnover threshold for the composition scheme to Rs 1.5 crore from the revised limit of Rs 1 crore and a 12 per cent GST rate for both AC and non-AC restaurants.
Apart from the uniform GST rate on standalone restaurants, the Council will also have to decide on allowing input tax credit. As per the CBEC’s internal estimates, a reduction in GST rate from 18 per cent to 12 per cent for all restaurants with full ITC will result in a revenue loss of around Rs 2300 crore per annum. Also, as per the estimates, a reduction in GST rate for all kinds of restaurant services including outdoor catering and takeaway would result in a loss of around Rs 4,000 crore per annum.
