The introduction of GST has been a game-changer for the Indian economy since it has replaced the complex and multi-layered indirect tax structure with a simple, transparent, and technology-driven tax regime. GST has integrated India into a single common market by breaking barriers to inter-state trade and commerce. It has improved the ease of doing business by removing cascading taxes and rising transaction costs. It has created an impetus for ‘Make in India’ Programme.
On the other hand, there are a lot of criticisms on the GST implementation. There are too many prices, too many goods have been omitted, and the mechanism is more complicated than it needs to be. Particularly so, when it comes to crediting taxes paid on inputs and providing exporters with refunds. Many of these issues have been acknowledged by the government, and are being discussed regularly.
The government is proposing the following steps to bring about further changes in the indirect tax system such as a single-source, fully-automated return system along with fully electronic refund process through FORM GST RFD-01 and single disbursement, rationalization of cash ledger, generation and quoting of Document Identification Number (DIN), Sabka Vishwas (Legacy Dispute Settlement) Scheme 2019, electronic invoicing, Quick Response (QR) Code, exemption from filing of Annual Returns for small taxpayers, and changes to the rates on goods and services.
The Economic Survey 2019-2020 provided the details of major decisions taken in 2019-20 regarding GST rates on services for the common man and Small and Medium Enterprises (SMEs) during FY 2019-20.
Also Read: CBIC’s Measures to Crack GST Fraud; No Limits to Link Bank Accounts
The following are the measures taken for the common man:
- With effect from 1 April 2019, GST at the effective rate of 1% without ITC on affordable residential apartments and 5% without ITC on residential apartments outside the affordable segment has been levied.
- Intermediate tax on development right such as Transfer of Development Rights, long term lease (premium), Floor Space Index has been exempted to address the cash flow issues in the real estate sector.
- GST rate on hotel accommodation service is redistributed as follows:
| Transaction Value Per Day | GST Rate |
| Rs.1000 and less | Nil |
| Rs.1001 to Rs.7500 | 12% |
| Rs.7501 or more | 18% |
- GST on outdoor catering services other than in premises having daily tariff of a unit of accommodation of Rs.7501 has been reduced from 18% to 5% without ITC.
The following are the measures taken for MSMEs:
- To boost the MSME sector, with effect from 1 April 2019, the composition scheme for service providers was introduced. The scheme can be availed by a registered person with an annual turnover of up to Rs.50 lakh in the preceding financial year. The service providers opting for new composition scheme can now pay GST @ 6% and would not be eligible to avail any input tax.
- The GST rate on the supply of job work services on diamonds has been reduced from 5% to 1.5%.
- The GST rate has been reduced from 18% to 12% on the supply of all job work services, which are not currently eligible for the 5% rate (such as machine job work in engineering industry), except the supply of job work on bus bodybuilding which would remain at 18%.
For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in.
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.
