Goods and Services Tax (GST) is the most significant reform in the history of indirect taxation in the country. Earlier a plethora of taxes were charged throughout the states in the entire country. GST is an improvement over the previous tax system since it centralizes the taxation system to a large extent. It is now easy for the common man to understand the percentage of indirect taxes that they are charged on any service. GST as a taxation system is aligned with the government's idea of a common national market.
The GST system was rolled out in July 2017. In total, the GST Council fixed a percentage of taxation on 1,211 items. GST Council has put 1300 goods and 500 services under five GST slabs, 0%,5%, 12%, 18% and 28% where most of the items are covered under the 18% slab since the government decided to put only luxury items under the high-end 28% tax slab, so about 177 items in the 28% slab were moved to 18% tax slab.
Implementation of GST has resulted in a decrease in the tax burden for the consumers. Since the government plans on developing a synchronized national market, GST could help in boosting the position of Indian market globally.
One of the significant Benefits of Goods and Services Tax is the transparency that it offers to the taxpayers. The earlier indirect tax system was so complicated that only a handful number of people understood the system.
The latest updates on Goods and Service Tax (GST) - 2019 is here:
The 32nd GST Council meeting was held on 10th January 2019 at New Delhi, chaired by Shri Arun Jaitley. The announcements made in this meeting gave relief to MSMEs and small traders. Here is a list of the key takeaways of the meeting:
An increase in the GST registration limit from Rs. 20 lakhs to Rs. 40 lakhs for suppliers of goods.
The turnover limit to join the scheme is increased to 1.5 crores, and the tax must be paid quarterly and the returns must be filed annually starting from 1st April 2019. These changes were made to the existing composition scheme.
The turnover limit to join the scheme is set to Rs. 50 lakhs and the tax rate to 6% for the New Composition Schemes.
There were no rate cuts announced. GoMs were formed to study the taxation of lotteries and under-construction properties.
Calamity cess for 2 years is charged up to 1% for supplies made within the State of Kerala.
The 33rd GST Council meeting was initially supposed to be held on 20th Feb 2019 via video conferencing but was later delayed to 24th Feb 2019 to meet at Delhi due to the refusal by some state FMs as the general elections were around the corner. It was chaired by the Finance Minister, Arun Jaitley. This was the first meet after the Interim Budget 2019. The sops announced by the GST Council promise to boost the real estate selling henceforth, ensuring the rate cut benefits to the neo and middle-class home buyers.
The affordable housing GST rate slashed to 1% from 8% without any benefit to the Input Tax Credit (ITC). However, the earlier proposal pointed out that the rate must be slashed down to 3% without the ITC benefit.
GST rate for non-affordable housing slashed to 5% without ITC from the existing rate of 12%.
The 34th GST Council meeting, chaired by Shri Arun Jaitley, was held on 19th March 2019 via video conference. The meeting was held to pass the notifications drafted by the legal and the rate fitment committees on the recent housing rate cuts. These rate cuts were announced at the 33rd GST Council meeting that was held on 24th February 2019. The highlights of this meeting are:
The committee approved the transition plan to implement the new tax structure for housing units.
The rates for new projects to be mandated from April 1.
Builders of existing housing projects must choose either of the two alternatives:
Choose the current rate of 12% (8% for affordable housing) and charge this GST rate in the invoices raised. Further, the ITC benefit is available to the buyer.
Choose to bear GST at a rate of 5% (1% for affordable housing). The benefit of ITC will not be available to the builder for the procurements used in construction.
Whoever chooses the second option must reverse the ITC that was accumulated on their closing stock of properties that are under-construction within six months.
A new rate of 5% (1% for affordable housing) is applicable to the residential properties whose construction is going on after 31st March 2019 or any new projects launched after 1st April 2019. Here, the ITC procurement benefits will not be available to the builders.
On 28th Mar 2019, the due date for ITC-04 of July 2017-March 2019 was extended to 30th June 2019.
The government proposed a 4-tier tax structure for all the goods and services under these 4 slabs- 5%, 12%, 18%, and 28%. Also, there are a few goods for which there is no tax. You can simply go through the table and find out the recent tax rates of some of the common items that fall under the 4 slabs.
Luxury items such as small cars, premium cars, cigarettes, aerated drinks, consumer durables like AC and refrigerators, high-end motorcycles, etc.
Toothpaste and soaps, capital goods, hair oil, and industrial
intermediaries are covered in this slab.
This includes processed food and computers.
Household necessities such as edible sugar, spices, oil, tea, and coffee (except instant) are included. Mishti/Mithai (Indian Sweets), Life-saving drugs and coal are also covered under this slab.
Edible items like sugar, tea, and coffee were included in the 5% tax slab, but milk does not attract any tax under this new GST regime. The idea here is to ensure the availability of basic food items to everyone. Instant food does not fall under this category.
Basic household items like toothpaste, hair oil, etc. that attracted 28% tax, will be now taxed at 18% only.
Sweets are also taxable at 5%.
The tax rate on coal is reduced from 11.69% to 5% to relieve the pressure on power industries.
GST also tries to give a push to the domestic industries. Make in India campaign is set after this reform.
We started enjoying the zero GST tax rate for the goods mentioned below as it is added to the previous list on the 11th of June:
Hulled cereal grains like wheat, barley, oats, rye, etc.
Wastes of the bones and horns
All types of salt
Dicalcium Phosphate of animal feed grade conforming to IS specification No. 5470:2002
Kajal [other than pencils and sticks]
Drawing books, picture books, and coloring books for children
Human hair – thinned, bleached, dressed or otherwise worked
Unit container-packed frozen branded uncooked/steamed vegetables
Vegetables preserved using different techniques including brine and other preservatives, which are not suitable for immediate human consumption.
Before the implementation of GST, the taxes levied on goods and services were separated. The Central Government had control over the taxation on goods manufacture and the State Government had complete autonomy in the taxation on the sales of goods.
Post implementation of GST, both Centre and state have the power to levy and collect taxes.
Excise Duty on Medicine and Toiletries
Central Excise Duty
Additional Duties of Excise on goods of special importance
Additional duties of excise on textiles
Additional duties of customs
Special Additional Duty of Customs
Surcharges and cesses
Central Sales Tax
Tax on luxury items
Tax on Gambling and Lotteries
State cess and surcharges
Which goods and services become cheaper under GST?
Commodities for daily use