Group of Ministers Current Affairs

GST council constitutes GoM to review GST Composition Scheme

The GST Council has constituted a Group of Ministers (GoM) to make the composition scheme more attractive and revisit the goods and services tax rates on restaurants. It will be headed by Assam Finance Minister Himanta Biswa Sarma and submit its report in two weeks.

Committee’s role

It will examine steps to make it more attractive as only 15.50 lakh businesses out of total 98 lakh have registered under GST regime opting for composition scheme. Businesses with turnover of up to Rs. 1 crore can opt for composition scheme and pay taxes in range of 1-5% and file returns quarterly.

It will look into whether turnover of exempted goods can be excluded from total turnover threshold for levying tax under scheme. It will examine whether scheme can be extended to taxpayers dealing in inter-state supplies of goods and whether the manufacturers opting for it can be given the benefit of input tax credit.

It is also been tasked to revisit tax structure of different categories of restaurants in order to rationalise or reduce rates. Currently, GST is levied at 12% on non-AC restaurants and 18% on air-conditioned ones. It will examine whether AC restaurants pass on benefit of cost reduction under GST to consumers and if they don’t, whether they be disallowed input tax credit claims.

Composition scheme

It is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs 75 lakh (Rs 50 lakh in case of 8 north-eastern states and hilly state of Himachal Pradesh). Its objective is to bring simplicity and reduce compliance cost for small taxpayers. It is optional under which manufacturers other than those of pan masala, tobacco and ice cream products have to pay 2% tax on their annual turnover. The tax rate is 5% for restaurant services and 1% for traders.

As per Central GST Act, businesses are eligible to opt for composition scheme if person is not engaged in any inter-state outward supplies of goods and not into making any supply of goods through e-commerce operator who is required to collect tax at source.

While regular taxpayer has to pay taxes on monthly basis, composition supplier is required to file only one return and pay taxes on a quarterly basis. Composition taxpayer is not required to keep detailed records that normal taxpayer is supposed to maintain.

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Government constitutes GoM to resolve IT challenges faced in GST implementation

Union Finance Ministry has constituted Group of Ministers (GoM) to monitor and resolve IT challenges faced in implementation of Goods and Services Tax (GST). It also Committee on Exports to look into issues of exports.

Both committees were constituted following the decision taken in 21st GST Council meeting in Hyderabad, Telangana.

Key Facts

Group of Ministers (GoM): It will be headed by Bihar Deputy Chief Minister Sushil Kumar Modi. It will be assisted in its work by Chairman, Goods and Services Tax Network (GSTN) and Chief Executive Officer, GSTN. It was formed after states had raised issue of glitches being faced by taxpayers in filing their GST returns on GSTN.

Committee on Exports: Its mandate is to look into issues of exports and recommend GST Council suitable strategy for helping the sector in the post-GST scenario. It will be headed by Revenue Secretary Hasmukh Adhia.

Background

Exporters raised concern related higher cost of working capital owing to difficulties in availing input tax credit and refunds after implementation of GST regime. Before GST, exporters enjoyed upfront tax exemption on goods to be exported, but now, they have to pay GST before procurement of goods and services.

Moreover, exporters also need to pay IGST on imported inputs. However, they can avail input tax credit after sale within domestic tariff area or after sending their shipments outside country. The exporters can then claim unutilised credit as refund, process in which their capital gets blocked with government and resulting in raising of their operating cost.

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