Tax Experts react to GST Council announcements on June 11

With 66 of the 133 industry representations addressed wrt to rates, GST Council has shown its continued willingness to reconsider which is heartening. Food items, exercise books, insulin, tractor components all saw rate reductions which will be relief to those sectors. We still need to read the fine print to see what more has changed. Raising the threshold on Composition Scheme to 75 lacs will provide relief to smaller players. E-way bill discussions are deferred to June 18 meeting, hope they defer this by 6 months and water down the provisions to avoid challenges. Anti-profiteering rules are now likely to be out post July 1 which could be a challenge from a clarity perspective. With potentially two more Council meetings we will be down to the wire for July 1 implementation.

It's really encouraging that Government, in a short span of time, managed to consider all the industry representations on rates and reduced/ realigned the rates on almost 50% of the items covered under those.  

Few anomalies have also been corrected like clarification regarding computer printers would attract GST of 18% and not 28%.  
Increasing the composition scheme limit to 75 lacs from 50 lacs will provide relief to many more small businesses, though service providers (except restaurants) continue to remain outside the ambit of composition levy.  
There has been an attempt to address the inverted duty structure in few cases like tractors, textiles etc by reducing the rate on parts and job work services.

Industry still awaits for clarity with respect to mechanism of implementing anti profiteering provisions and E permits.  Further, few other aspects such as treatment of transactions between J&K & other states and refund of CGST paid in case of goods manufactured in excise free zones still need clarity. 
Industry now has a week more to make any further representations on GST rates as the next council meeting takes place on June 18th.

Overall, the decisions in the council meeting are all positive and demonstrate a constructive dialogue in between the Government, which should be a key feature of any such reform.

Hope this dialogue would continue between the industry and 18 sectoral groups that have been formed recently to look at the industry specific issues and guidance. 

There are indeed some welcome decisions/ announcements out of the GST Council meeting.

The GST Council has decided to increase the threshold of the composition scheme from 50 lakhs to 75 lakhs. This should mean that a significant number of SME sector players should benefit from not having to meet with detailed compliances under GST and also having a less financial burden, on account of GST. 

In terms of rates, the GST Council has reduced the rates for 66 items. The approach seems to have been to address cases where there was an error in the fitment exercise and also to reduce the rate of key products used by the common man. Importantly, the decision demonstrates the welcome approach of the GST Council in hearing industry’s issues and addressing concerns, in several cases. These include computer printers, insulin, tractor components (to address inverted duty structure), packaged food, etc 

The deferment of discussions to next Sunday around e-way bills is of concern to industry, as it would indeed be a tall task for industry to be prepared as on July 1^st, if the same were to be made fully applicable on the start date.

The increase in composition scheme limit from 50 lakh to 75 lakh would augur well for small traders, manufacturers and restaurants. Also the rationalisation of rates on tractor components, school bags, agarbattis, insulin and some other products are very positive and would be welcomed by the industry.

The statement by the Revenue Secretary that anti-profiteering rules are still being finalised and are not linked to introduction of GST would be a matter of concern for the industry, which was keenly awaiting clarity on how the anti-profiteering provisions would be implemented at the ground level.

The deferment of the finalisation of the e-way rules to the next meeting of the GST Council would leave very little time for the industry to prepare and adapt to the said rules. Industry would request the GST Council to defer the introduction of e-way bill requirement and not make it effective from July 1, 2017

Considering the fact that GST is the overhaul of the entire Indirect tax system, it has to be given a 360 degree view. After clearance of law, rules, rates, in it's meeting held on 11 June 2017, the GST council has given a look to the business aspect of GST rather than tax mechanisation. The GST council considered the 133 representations filed by the stakeholders of GST and lowered the rates on those products which are more or less of daily use to the general public thereby maintaining the two principles of equivalence and utilisation behaviour. By introducing levy of 5% GST for job work in relation to textile sector, gems and jewellery sector it appears that sooner instead of later, the government intends to bring unorganised sector within its ambit.

It seems the GST council is quite geared up in implementing the GST. It's time for the business to move to fifth gear. While implementation is clearly visible by 1 July 2017, all eyes are now on how government is going to handle compliances from IT perspective.

The 16th GST Council meeting re-considers the rates and threshold limit for availing composition benefit. This is very encouraging as 133 representations were examined at length and appropriately addressed. The next meeting on June 18 will again be relevant to finalise rate on some other sensitive products. The next meeting may also provide whether July 1 will be extended.