In a move to reduce tax burden for small businesses, a ministerial panel recently recommended lowering goods and services tax (GST) rates for small businesses.
The GST council is scheduled meet on November 9 in Guwahati, and if the recommendations are accepted, it would benefit millions of small enterprises, eateries and traders, Mint reported.
The ruling Bharatiya Janata Party is facing flack from opposition for hardships caused to businesses due to cumbersome GST norms. The move might give the ruling government extra mileage in the assembly elections in Himachal Pradesh and Gujarat slated in November and December respectively.
The ministerial panel recommended, in a meeting on Sunday a new tax rate under the composition scheme would be 1 percent for traders, manufacturers and restaurants, which previously stood at 1 percent, 2 percent and 5 percent, respectively.
The panel further recommended increasing the ceiling for eligibility to enterprises with annual revenue of less than Rs 1.5 crore from the current Rs 1 crore. In the last GST council meeting the ceiling was raised from Rs 75 lakh, reported the business daily.
The ministerial panel is headed by Assam finance minister Himanta Biswa Sarma and includes other members like Bihar deputy chief minister Sushil Modi, Jammu and Kashmir finance minister Haseeb Drabu, Punjab finance minister Manpreet Singh Badal and Chhattisgarh minister of commercial taxes Amar Agrawal.
The panel has recommended the GST Council let small traders either pay 1 percent on their revenue of taxable items or 0.5 percent tax on total turnover, a GST council official said.
"In the latter case, central and state governments will get a quarter of a percent of tax each. The idea is to make the system simple," Mint quoted the Punjab finance minister as saying.
In an interview with The Wire, veteran Congress leader and the former finance minister, P Chidambaram lashed out at the government saying, "This is a complete mess of the GST. This is a caricature of GST. Everything about this law that they made and the tax they have introduced is flawed. Concept, design, structure, rates, backbone, compliance requirements."
Earlier, revenue secretary Hasmukh Adhia said that he believes that the new GST regime has been well-established, and a complete overhaul of the tax rates is now required to reduce the burden on small and medium businesses.
"There is a complete overhauling that is required. It is possible that some items in the same chapter are divided. So ideally we should do harmonisation of items chapter wise and wherever we find there is a big burden on small and medium businesses and on common man, we have to bring them down (and) then only there will be a better compliance, a better acceptability of GST," Adhia explained.