In an effort to soothe nerves of small enterprises and exporters, the Goods and Services Tax (GST) Council on Friday cut rates on 27 items and 12 services, and approved sweeping changes in rules.

The business community has been battling with procedural irritants, delayed refunds and technical glitches on returns filing since the time GST was implemented from July 1, 2017.

The Finance Minister Arun Jaitley-headed panel pushed for big changes in its 22nd meeting to iron out rough edges of the new tax system that has been hit by multiple pain points, said a report.

Prime Minister Narendra Modi said changes made in the GST regime giving relief to small and medium businesses have been hailed across the country as they kindled the festive mood of Diwali a fortnight before it is celebrated.

Maintaining that he does not want the business class to get caught in red tape, the PM said, based on the information the government had, Jaitley convinced everyone at the GST Council meet on Friday about the need for altering some of its provisions.

"The government has addressed the immediate concerns of 90% of taxpayers who contribute appx. 10% of the tax collection by relaxing the compliance norms," Sachin Menon - Partner and Head, Indirect Tax at KPMG in India said.

"Hopefully the concerns of minority taxpayers who pay 90% of the tax revenues, will hopefully be addressed in next council meeting," he said.

Here is a list of 3 sectors highlighted by KPMG that are likely to benefit the most from the changes: 

Analyst: Harpreet Singh, Partner, Indirect Tax, KPMG in India

GST Relief for Small and Medium Enterprises (SMEs):

Increasing the composition threshold from Rs 75 lakhs to Rs 1 crore and changing the periodicity of filing return and paying tax from monthly to quarterly for dealers with turnover up to Rs 1.5 crores, are definitely steps in the right direction.

This would substantially ease the compliance for the SMEs sector and settle their nerves.

Quarterly return filing means the immediate need to invest in IT infrastructure for monthly online filings is no more required, as SMEs can continue to get the quarterly compliances done through their CAs and accountants using their IT infrastructure.

Thus, reducing their GST compliance cost. Further, increase in composition scheme threshold would imply that now more dealers with turnover between Rs75 lakhs and Rs1 Crore can opt for this simplified compliance scheme, where tax needs to be paid a flat rate and return filing is quarterly.

GST reboot for exporters:

Expediting post GST refunds, allowing IGST exemption under Advance Authorization and EPCG schemes and to EOUs until March 31, 2018 is a huge relief for the exporters.

This not only avoids blockage of working capital but also reduces the compliance burden. Kudos to the Government for listening to the voice of the industry and taking the right step at the right time.

With free flow of credits, lesser supply chain bottlenecks, better movement of goods and this new announcement, it would not be a surprise to see the exports going uphill"

Gems & Jewellery Sector

Rescinding temporarily Notification that extended provisions of Prevention of Money Laundering Act (PMLA Act), to gems & jewellery sector which provided for furnishing PAN card for purchases above INR 50,000, is definitely a good news for the sector.

This announcement is well timed as it is likely to boost the pre-Diwali sales. Also, this relaxation would encourage free trading in the sector, without any apprehension of doing KYC compliances in the mind of the customer.

This is one key sector which was adversely impacted post-GST and hopefully, Friday’s decision should bring the smiles back on the traders in the sector.

 10 Oct 2017, 05:19 AM