Customers eat and drink at Niros Restaurant on Mirza Ismail (M.I.) Road in Jaipur. (Photographer: Udit Kulshrestha/Bloomberg)
8 years ago
Nov 11, 2017
Rate on items like chocolate, chewing gum, aftershave, beauty products, powder, detergent and marble was lowered to 18 percent from the highest 28% bracket
The finance minister today said the government will pass an amendment to increase the threshold limit of the composition scheme to up to Rs 2 crore. On an immediate basis, the Council will hike the threshold to Rs 1.5 crore once the amendment is passed, the finance secretary said.
The composition scheme allows small businesses to pay taxes at a lower rate without getting any input tax credits.
A uniform tax rate of 1 percent will apply on all traders and manufacturers. For restaurants, the rate remains unchanged at 1 percent. The Council expects most restaurants to opt for the 5 percent rate that will now apply to them instead of the 1 percent under the composition scheme, the finance secretary added.
Besides, the tax rate for composition dealers will now be applied to the taxable turnover, and not the total turnover, which was the case earlier.
All restaurants will come under the 5 percent GST bracket and the industry will not get the benefit of input tax credit as they have failed to pass these on to consumers, Jaitley said.
We have been systematically looking at 28 percent tax bracket and rationalising certain items out of that bracket into the lesser categories, mostly 18 percent but in some cases even less.
Prior to GST implementation, the tax slab for Jyothy Laboratories was at 21 percent and post GST it has come down to 17 percent. A reduction of 4 percentage points will be passed on to the consumer in entirety. This move will also add further uptick in rural demand which showed signs of improvement in Q2. Due to the easy GST compliance processes by the government we will also see a lot of unorganized players shifting to organized sector leading to a healthy competition and more choice for the consumers.
With the rate reduction on a plethora of products, the next step of the government should be to ensure that the benefit of the rate reduction goes to the consumers. It appears that after this mass rate reduction various anti-profiteering problems may kickoff for businesses which would not pass on the benefit to the consumers.
