GST Council cuts rates of over 80 goods, services

 Ahead of the February 1 Budget presentation, Finance Minister Arun Jaitley on Thursday almost delivered a mini Budget in terms of tax cuts and revenue distribution.

The GST Council headed by him decided to lower rates of over 30 goods including domestic cooking gas and packaged drinking water. It also reduced levies on 53 services that provide employment to a large number of people.

The GST rates on about 40 handicraft items were slashed. The new rates will be effective from January 25.

Another thorny issue of return filing under the GST regime was discussed threadbare in the council's 25th meeting with Infosys Chairman Nandan Nilekani giving a detailed presentation on how to simplify the filing process. A final decision might be taken in the next meeting. Infosys is the IT service provider for the GST Network.

"I can say that the direction is that initially there will be a 3B return and there will be a supplier invoice. This we think will be adequate and a simple system," Jaitley said at a press briefing after the GST Council meeting with his state counterparts and other officials.

In the wake of GST revenue collections deteriorating month after month, the council also decided to build forceful anti-evasion measures that would help shore up revenues.

The council also decided to divide Rs 35,000 crore IGST collections between the states in the wake of their falling revenues.

Jaitley said so far the government relied on "unilateral declarations" by traders but a review of GST revenue collection indicated it was necessary to build anti-evasion measures. The implementation of eWay Bill was one such step.

He said eWay bill will make tax avoidance extremely difficult as the government will have details of all goods above the value of Rs 50,000 moved and can easily spot the mismatch.

"Composition scheme was seriously discussed. There are about 17 lakh dealers registered to the scheme but the tax collection in the first quarter was only Rs 307 crore," Jaitley said. The scheme allows small businesses to pay taxes at a concessional rate.

A discussion on bringing petroleum products and real estate under the ambit of GST was deferred for the next meeting. Jaitley said the next meeting will be held with all state finance ministers through video conferencing within 10 days.

The major items on which taxes were reduced included old vehicles, diamond and precious metals, velvet fabris, items of use in agriculture, bio-diesel, bio-pesticides. Taxes were completely waived on ambulances, de-oiled bran rise, vibhuti and accessories for manufacture of hearing aids while they were raised on cigarette filter rods.