The announcement in this regard was made by Union Finance Minister Piyush Goyal following a meeting of the GST Council, which chose to reduce tax rates on a wide range of daily use appliances and products.
The formats and business process approved are in line with the basic principles with one major change - the option of filing quarterly return with monthly payment of tax in a simplified return format by the small tax payers.
Deloitte India Partner M S Mani said it would be logical to expect that once the GST collections after the recent reductions stabilise, the remaining items such as televisions of all sizes, dishwashers, digital cameras, air conditioners could be considered for an 18 per cent rate. To counteract this double taxation, the government refunds the entire tax paid on the input - meaning the raw materials - as long as the producer has paid the output tax. The revised tax rates will come into effect from July 27.
"Out of the 49 items now taxed at the highest rate of 28%, rates on 17 have been reduced to 18%", Pratik Jain, partner & leader, indirect tax, PwC, said in a note. "It has also been decided that the GST Council will rise above revenue consideration and focus more on job creation and economic growth", Finance Minister Piyush Goyal said. Footwear costing up to Rs 1,000 will now attract 5 per cent GST.
The Goods and Services Tax Council on Saturday slashed rates on over 50 products in a move aimed at appealing to traders and the middle classes as Prime Minister Narendra Modi's government eyes next year's elections.
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Also, enterprises with annual turnover of upto Rs 5 crore would have to file quarterly returns instead of the current monthly filing, although they would continue to pay tax on a monthly basis.
"It would be ideal if only demerit goods are retained in the 28 per cent slab so that a gradual movement towards having fewer GST slabs can be initiated", Mani said.
During the meeting, the council also made certain amendments to the GST Act including raising the upper limit of turnover for opting for composition scheme from Rs 1 crore to Rs 1.5 crore.
Taxpayers who are yet to register under the GST have been given a final extension till August 31.
This will reduce harassment of transporters, he said. Around 90 consumer items, many of them popular with urban middle-class voters, will be impacted by the tax cut.