A reduction in prices of sanitary napkins and various consumer durables was the highlight of the last GST Council meeting held in June. This time though, the focus was on easing compliance for small and medium enterprises and boosting digital payments.
The GST Council meeting on Saturday was attended by finance ministers from 22 states and three union territories.
"A sub-committee would be formed to consider easing the compliance burden on medium and small enterprises having turnover of less than 1.5 crore," said Piyush Goyal, interim union finance minister, who attended the meeting as chairman of GST Council. He admitted that medium and small businessmen are facing hardships because of GST.
"The issues related to returns would be discussed threadbare by the sub-committee of the GST Council," Goyal said. He assured that the sub-committee would also look at resolving the technical issues faced by medium to small enterprises in complying with the current GST tax system.
Earlier in the day, Bihar Deputy Chief Minister Sushil Kumar Modi, an important member of the GST Council, had indicated that the council is eager to consider easing up compliance burden on small and medium taxpayers.
Taxpayers with up to Rs 5 crore turnover were allowed to stay exempt from filing quarterly returns in the last meeting. This time, the benefit was extended to businesses with turnover of Rs 1.5 crore.
"This can happen only after the collections (in revenue) touch Rs 1 lakh crore," said Modi. So far, revenue has averaged from about Rs 89,000 crore to clocking Rs 96,000 crore in June.
Modi, along with finance ministers of Kerala, Delhi and Punjab, would form a committee under the chairmanship of union finance minister of state, Shiv Pratap Shukla, to address the woes of small and medium business owners.
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Going ahead, GST revenues are likely to see some fall as rate reductions on a number of items are brought into effect.
Meanwhile, with large number of medium and small enterprises also seeking cash credit of their refunds, the council approved a two per cent reduction to taxpayers availing the digital mode for tax payment. "The council approved to make adequate software to give a 20 per cent cashback of up to Rs 100 on GST paid by those small and medium businesses paying using Rupay cards or UPI through BHIM mobile app, or any USSID payment systems" Goyal said, addressing a media briefing.
No discussions took place on the contentious issue of including petroleum products in the GST net. "No state would agree to let go of their right to impose cess on petroleum products just now," said Himanta Biswa, Assam finance minister, also member of the small group of ministers looking to ease GST woes of the MSME sector. "I don't see it (inclusion under GST) to have a big impact on reducing petrol and diesel prices," Biswa said.
At the GST council meet, Delhi Finance Minister Manish Sisodia proposed a scheme for the MSME with turnover of up to Rs 5 crore per annum, in which a certain proportion of the tax paid by registered dealers in MSME sector is reimbursed to them, by the Centre and the state.
"This scheme would not distort GST tax revenue and would go a long way in creating employment and profitability in small business," Sisodia said addressing after the meeting.
"On rate rationalisation, the council is likely to take a view after some more consultations, said revenue secretary Hasmukh Adhia after the meeting. If approved, GST tax slabs of 18 and 28 per cent could be merged to have a 14-15 per cent tax slab.
"We have already decided in-principle to abolish the 28 per cent tax rate," Adhia added. However, the council sought more data on its impact on an already below expectation revenue collection from GST. "No decision was taken about the merging of rate slabs today," said Adhia.
He is hopeful that going ahead, revenue numbers would not be an issue as tax compliance rates under the new tax regime are 'much higher'.
The next meeting of the GST Council is likely at Goa on September 29 and 30. "By then, we hope to suggest measures to make MSME's competitive and improve on the measures already suggested," said Manpreet Badal, Punjab finance minister and member of the GoM formed to reduce GDT burden on the MSME sector—considered the backbone of India's economy.