Goods and Services Tax Bonanza

Prime Minister Narendra Modi announced Diwali bonanza on Saturday with certain changes in the tax structure in GST. The GST council has slashed the tax rates on 27 products of daily use and providing relief to small and medium businesses. Ramesh Abishek, secretary, Department of Industrial Policy and Promotion, India, says the government is determined to pursue structural changes to the economy, but is flexible in implementation. It seems Diwali comes early for SMEs and exporters. With this it eases compliance burden on small firms; working capital relief for exporters; e-way Bill deferred till April.

The GST Council says, they took major decisions to prevent working capital of exporters from getting locked up and reduce the compliance burden on small and medium enterprises. The Council also postponed imposing tax deducted or collected at source, which will particularly benefit e-commerce companies. It also decided to set up a committee to frame principles to reduce rates, depending on revenue patterns of the GST so that no ad hoc decision was taken, said Finance Minister Arun Jaitley, who chaired the Council meeting.

With this new regulation the exporters will start getting credit for the integrated GST (IGST) paid for July from October 10 and for August from October 18. Other refunds of the IGST paid on supplies to special economic zones (SEZs) and of input taxes on exports under bonds or the letter of undertaking would also be processed from October 18. Both Central and state officials will be empowered to do so. The decision, an interim one, was based on the recommendations of a committee headed by Revenue Secretary Hasmukh Adhia. He also added, there would be long-term solutions for the exporters , a facility of e-wallet will be set up, preferably by April 1 next year.

"Diwali has come early for our citizens due to the decisions taken in the GST Council. We had said we will study all aspects relating to GST for 3 months, including the shortcomings. And thus, the decisions were taken with consensus at the GST council," PM Modi said.

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