Looking at the Glass Half Full: Positives of India’s 9 New GST Rules
“Most FMCG goods and daily use items have been capped at 5 percent which means that the end consumer will not have to pay more for things they use regularly.”
Photo Credit : Image: goodthinkinc.com,
Nine GST rules for the composition scheme, valuation of goods and services, and input tax credit were issued a few days back and were open for public commentary. After receiving suggestions from trade bodies, professional bodies, and large enterprises, these rules have now finally been approved by the GST Council in their current meeting in Srinagar.
Most of these rules are based on current tax laws such as VAT and Services Tax and revised to integrate with Goods and Services Tax. The primary intention of these rules is to avoid any type of business disruption due to a change in tax regime and a smooth transition for the business community with minimal change management.
These nine rules address some of the most critical issues under GST, such as the valuation of supply. One such rule says that 110 percent of the cost of manufacturing or cost of provision of goods or services shall be considered where value cannot be estimated in the open market or value of goods of like kind and quality, GST will be charged accordingly on such amount. These rules have also laid down format for GST invoice.
Approval of these rules and the announcement of the final GST rates for goods and services has pushed the tax change into its final phase. Post their two-day meeting in Srinagar, the GST Council’s fitment committee has come up with an extensive list of rates for all goods and services and has mostly kept to its promise of keeping the tax incidence low. Keeping essential items like milk, cereal and food grains has lowered the burden of basic necessities for the general public. Most FMCG goods and daily use items have also been capped at 5 percent which means that the end consumer will not have to pay more for things they use regularly.
Coming to services, we see that 83 services have been exempt from tax and 13 of them have been kept in the 5 percent bracket including transportation by rail or air (economy class). Health, education, and budget hotels which are in the current exempt list have been given the same treatment. The only new inclusion in the exempt list is probably the GSTN (Goods and Services Network).
Of course, there are still some doubts among industry experts and leaders – and a policy change of this nature cannot be implemented without a few concerns being raised. But we are hopeful, that post the initial transition hiccups the economy will settle down to a more efficient pattern and GST will prove to be the game-changer it is purported to be. The approval of these rules and availability of GST rates will help businesses prepare for the coming era where a fully-fledged united tax rate exists.
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