New GST Rates. The introduction of the GST (Goods and Service Tax) in India was brought into existence on 28th February 2006.In the Lok Sabha on 29th March 2017, The GST Act was released. GST, an indirect tax was ultimately implemented on July 1, 2017, and it is applicable all over India. GST replaced several surging taxes imposed by the central and state governments. It was introduced as The Constitution Act 2017.
Multiple changes since its inception for purpose of betterment of Indian economy
There have been multiple changes in the proposed GST bill also the rules and regulations related to it, ever since the bill has been passed by the Rajya Sabha, and came into effect on 1st July 2017.The Indian taxation system has been completely revolutionized by Goods and Services Tax.
The recent GST Council meet
The recent GST Council Meeting discussed and decided to make changes in the GST rates of some specific goods.Prime Minister Narendra Modi in a recent GST meeting said that GST has become “even simpler” after GST Council’s recommendations and that it is in accordance with the government’s constant mission to safeguard the interests of citizens and ensure the growth of Indian economy.
The GST Council has made many changes to GST to provide relief to small and medium organizations on filing and the payment of taxes. Eased rules for exporters and reduced tax rates of around two dozen of items.
These changes were made after three months of releasing, new indirect tax regime. Thereby, it has become much easier. The recent recommendations will help small and medium enterprises, immensely.
GST is ensuring sufficient to safeguard, the interests of our citizens and developing India’s economy.
An attractive composition scheme has been made and some other measures for facilitation. They will most probably make GST furthermore friendly and effective for the people.
The recent council also took some major decisions in order to prevent the working capital of exporters from locking up and reduce the agreement burden on small and medium organizations, by reducing rates on 27 daily essential items. It has deferred to implement e-way Bill and reverse charge mechanism.
The Council also has postponed imposing tax deducted or collected at the source, which will specifically benefit e-commerce companies. It has also decided to set up a committee to frame a proposition to reduce the rates that rely on revenue patterns of GST.
Exporters will start to get the credit for the integrated GST (IGST) paid in July from 10 October and for August from 18 October. Central and state officials will be given the power to do so. This decision was based on the recommendations of a committee that is headed by Revenue Secretary. Mostly by next year, there would also be long-term solutions for exporters.
The e-wallet will have a notional amount to give advance credit to the exporters. This credit will be used to pay the GST or IGST for their respective products.The e-wallet will be developed by a technology firm. This was taken because no sector could be exempted from the GST.
The Council has allowed an annual turnover of 1.5 crores in order to file returns and pay taxes. It has also raised the limit in terms of annual turnover to Rs 1 Cr from the current Rs 75 lakh to Rs one crore, for the composition scheme, that permits flat rate and simple compliance. They are required to file and pay taxes only quarterly.
Under this scheme, a trader pays the GST at a percent, the manufacturer pays at two percent and a restaurant owner pays at 5 percent, but they are not permitted input tax credit.
While they are permitted to file quarterly returns.
These moves are aimed at reducing the compliance burden on small and medium organizations. While small and medium enterprises pay the small tax are small, had a huge compliance burden on them.
90 percent taxpayers under GST have an annual turnover of up to Rs 1.5 crore. There are approx 9.8 million assesses under the GST with around 7.2 million migrants from old tax regime and 2.6 million new members.
The services sector is still not availed appropriately by the benefits of this scheme. The Council has deferred the reverse charge mechanism (RCM) till March 31, 2018. In GST the one who sells goods and services has to pay the tax. But under RCM, those buying goods and services from unregistered companies have to pay the tax. This move will definitely help many organizations, but it will specifically be helpful for small enterprises since the big companies were asking them to register. Those with the annual turnover of Rs 20 lakh are exempted from registration.
The Council has constituted a group of ministers to evaluate whether those under the composition scheme could be permitted to deal with inter-state business.
Impact of GST on Pharmaceutical Industry
Pharmaceutical companies are supposed to pay more cost for manufacturing as per GST rates and hence the MRP of the product is required to change to absorb that impact.From a viewpoint of wholesalers and retailers, margins are not going to go down immediately and stability in supplies will soon be seen.
From a perspective of wholesalers and retailers, margins are not going to drop on an immediate basis and stability in supplies will be seen soon.However, there are multiple opinions surrounding it as its impact on multiple industries like the pharmaceutical industry, creating certain uncertainties in the entire supply chain.
The key things that have revolutionized are manufacturing price- many raw materials for products have shifted 5% VAT bracket to 12% GST bracket and multiple medicines have shifted from 5% to 12% GST bracket.
GST for the jewelry sector
GST implementation is expected to be better and positive for the jewelry organizations.
The GST rates on gold jewelry are finalized at 3%. This GST rates is lower than expected by jewelry sector of a 5% rate and therefore is a big relief.
Textile industry gets a reduction in GST for MMF yarn
As per the Southern India Mills Association the reduced GST rates for MMF yarn from 18 percent to 12 percent would be beneficial for spinning and the power loom sectors. MMF and yarns were categorized under 18 per cent GST rate while the fabrics were under five percent with no refund of Input Tax Credit.
A huge duty problem was created because the synthetic sector and cost of synthetic product already had suffered serious threats by cheaper imports. The industry has requested the GST Council for making reductions in MMF yarn rate to 12 percent in order to avoid cost escalation of yarn
The latest revisions in GST rates for the synthetic textile industry has announced a reduction in tax rates on MMF from 18 percent to 12 percent, and the GST levy on job work to 5 percent, from the earlier 12 percent.
The industry of spinning and weaving segment has welcomed this change along with an extension of RCM till March 2018. Meanwhile, the industry is still seeking refunds for the accumulated input tax credit at the fabric stage, especially for processed fabrics, besides mandating the duty drawback committee to recommend appropriate duty drawback rates. An extension of transitional provision is further expected.
India saw a significant number of reforms in 2016-17 and is all set to change the market functioning. GST, being the biggest tax reform, which all industries are experiencing.