Bringing some cheer to the automobile industry, the Goods and Services Tax Council on Saturday decided impose only a part of the total 10% increase in cess on motor vehicles, lowered tax rate on 30 household items and extended date for filing of returns.
The Council also accepted a key demand of the automobile industry and introduced gradation in the cess imposition rate by containing the overall tax blow on mid-size cars, hybrid and 13 seater vehicles. The cess rate for mid size cars has been raised to 17% (out of total cess of 25%) from 15% now. The total tax incidence on this category has gone up to 45% from 43%. In the case of luxury cars the cess has been raised to 20% ( of total 25%) from 15 % now. Total tax incidence on this segment would go upto 48% from 43% now. On SUVs the total tax incidence would be 50%, implying that of the 10% hike only 7% has been effected.
There is no change in overall tax incidence on 1200 cc petrol and 1500cc diesel cars, finance minister Arun Jaitley told reporters after the council meeting here.
Here is how it stacks up for now:
► Small cars, 13-seater vehicles & hybrid cars : No change
► Mid-size cars increased by 2%
► Large cars increased by 5%
► SUVs increased by 7%
The council also decided to reduce tax rate on 30 goods including idly batter, custard powder, dried tamarind, Dhoop agarbatti, raincoats, rubber bands.
Khadi sold at the KVIC outlets has been exempted from GST, said Jaitley.
The Council has amended the framework of branded food products to prevent abuse by some manufacturers. Those products that had registration as on May 15, 2017 would face 5% GST. Besides, all those packaged products that bear some symbol on which exclusivity or actionable claim can be made will also face 5% tax and not enjoy tax exemption.
The council after a detailed review of the IT backbone and GSTN decided to form a group of ministers to review the portal's working and extended the deadline for filing of returns. Summary return form GSTR3B will now be applicable till December and GSTR1 for July can be filed by large taxpayers (over Rs 100 crore turnover) by October 3 and rest by October 10th. The deadline for this form was September 10.
Handicraft traders who sell to other states will not have to register if their turnover is below Rs 20 lakh.
The council also reviewed GST collections so far.
Jaitley said GST on about 30 items have been lowered after anomalies in the fixation of rates were pointed out.
To deal with businesses which are deregistering brands post GST to avoid taxes, the panel decided May 15, 2017 as the cut-off date for considering as a registered brand for the purpose of GST levy, irrespective of whether or not the brand is subsequently deregistered.
Unbranded food items are exempted from the GST, whereas branded and packaged food items attract 5 per cent rate. Hence, many businesses are deregistering their brands to avoid the levy.
The tax has been lowered on dried tamarind, custard power, oil cakes, dhoop batti, dhoop and other similar items, plastic raincoast, rubber bands, rice rubber rolls for paddy de-husking, computer monitors and kitchen gas lighters and brooms and brushes.
Also, the deadline for filing of sales return or GSTR-1 for the month of July, the first month of implementation of the new tax regime, has been extended by a month to October 10.
Deadlines for other three returns to be filed under the GST regime have also been extended.
Jaitley said overall GST collections have been robust with over 70 per cent of eligible taxpayers filing returns of about Rs 95,000 crore.
The meeting, the second since the implementation of GST, reviewed the functioning of GST Network -- the IT backbone and portal for registration and tax returns under the GST regime.
GSTN on "two-three occasions got overloaded. These are transient challenges and glitches in technology. The council has decided to appoint a committee to interact with GSTN for smooth transition", the finance minister said.
Since the work is huge, the period of filing of returns has been extended, he said.
Jaitley further said that food stuff sold in open was categorised at zero per cent tax rate while the branded ones attracted 5 per cent.
Some businesses were deregistering their brands and selling under corporate brand name, creating inequality of trade, "so we amended the rule", he said.
"If you fall in either of two categories, you will pay 5 per cent tax -- one, if on May 15, 2017, you had a registered trade mark you have to pay 5 per cent GST. Two, if you have a mark or a name on which you are entitled to maintain actionable claim or exclusivity, then you have to pay 5 per cent," Jaitley added.
Khadi fabric sold through KVIC stores would be exempted, he said adding inter-state sales where turnover is less than Rs 20 lakh as also for artisans will not need registration.
Similar dispensation for certain categories of job work, excluding gold, has also been approved.
At its last meeting on August 5, the panel had approved hike in cess on mid, large size cars, SUVs, hybrid and luxury ones to up to 25 per cent, from 15 per cent. Subsequently, an Ordinance promulgated and the council today looked into the quantum of hike.
Car prices had dropped by up to Rs 3 lakh as the tax rates fixed under the GST that came into effect from July 1, was lower than the combined central and state taxes in the pre-GST days.
To fix this anomaly, the council raised the cess.
Revenue Secretary Hasmukh Adhia said the council has decided that GSTR-3B will be filed for four more months till December.
"For GSTR-1, 2, 3, we are giving a long rope and we are staggering the return filing date for July," he said.
"(For) companies with turnover of over Rs 100 crore, the last date for filing GSTR-1 will be October 3. For the rest, it will be October 10," he said.
GSTR-2 for July will have to be filed by October 31 and GSTR-3 by November 10.
Date of GSTR 1, 2, 3 return filing for month of August will be informed later.
Jaitley said businesses can opt for Composition Scheme till September 30 and the council has also allowed businesses to make rectification in transition form TRAN-1 once.
Under the GST, which replaced over a dozen central and state levies in the biggest tax reform since independence, cars attract the top tax rate of 28 per cent.
On top of this, a cess of 1 to 15 per cent has been levied for the creation of a corpus to compensate states for any loss of revenue from implementation of GST.
With PTI inputs
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