The government announced the significant update of the goods and services tax regime after three months.
The announcements come two days after PM Modi said that the government will graciously accept criticism on the economic front, and will review GST procedures and remove all bottlenecks.
The scheme allows small businesses, including eateries, to pay 1-5 percent tax without having to deal with the three- stage filing process.
As a lot of traders were not satisfied after GST was first rolled out in July, businesses with turnover upto Rs 1.5 crore annual turnover will now be allowed quarterly filling. Details of the meeting were sketchy, but sources said addressing concerns related to GST are top priority for the government.
Items in the 28% slab include chocolates (with and without cocoa), extract or concentrate of coffee, certain non-alcoholic beverages, sweetened aerated drinks, tobacco other than bidi, marble, granite, wall paper, certain types of cement, paints, varnishes, perfumes, beauty and skin care products and after shave lotions. A large number of traders and businessmen were very disappointed with the apparent effects of demonetization and how the Goods and Services tax was implemented earlier in 2017.
GST rate cuts have also been done for unbranded ayurvedic medicines, e-waste, and plastic.
Merchant exporters will now have to pay nominal GST of 0.1 per cent for procuring goods from domestic suppliers for export, the release added.
Jaitley informed that around 72 lakh taxpayers have been transferred to the GST network whereas 25-26 lakh are new taxpayers.
"The GST Council has already taken pro-active measures in rationalizing GST rates in the recent past and the trend would continue in future wherever the taxation is deemed to be slightly on the higher side".
# Composition scheme has been relaxed, threshold now at Rs 1 cr from Rs 75 lakh.
The tax rate for traders of goods in the composition scheme is 1 per cent, while it is 2 per cent for manufacturers and 5 per cent for suppliers of food or drinks for human consumption (without alcohol).
The GST council slashed the rates on 27 items of common consumption, including roti, khakra, namkeen, stationery, man-made yarn, with a lot of them being brought under the 5% category. Service providers can not opt for the scheme.
A thin, crisp cracker made with wheat flour, salt and oil, Khakhra is a popular staple in Gujarati and Rajasthani cuisine.
Also, the taxpayer can only make intra-state supply (sell in the same state) and cannot undertake inter-state supply of goods. Among services, job works like zari work, imitation jewellery and printing items have also been brought under this slab.
If GST on service is reduced to 10-percent, then scope of tax on service can be reduced from present 20 lakh per annum to five lakh per annum with those availing service worth more than five lakhs required to deposit GST directly to public-exchequer rather than routed through service-provider.