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Last updated: 24 Jul, 2018  

gst-THMB.jpg GST rate cut, easier compliance norms

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Bikky Khosla | 24 Jul, 2018

The GST Council last week announced reduction of rates on a list of 100 items, including sanitary pads, small TVs and footwear. The new rates are to be implemented from July 27, and now with the tax rate coming down on 15 items from 28 percent to 18 percent, the number of products in the highest GST slab will come down drastically. Announcing the decision, Union Finance Minister Piyush Goyal said the move would benefit consumers, but views vary on the probable outcome of the decision.

The Opposition took no time to view that the decision was taken keeping in view the upcoming Lok Sabha elections in 2019 and Assembly elections in Madhya Pradesh, Rajasthan, Chhattisgarh and Mizoram later this year. On the other hand, from an economic point of view, some experts point out that the cut would result in a revenue loss that is as high as 1 percent of the tax budgeted. This amount may reach Rs 60 billion, according to some estimates. For them, this can be bad news at a time when the budget deficit needs to be kept under control.

In contrast, some others view that private consumption will get a big boost from the rate cut. For the last few years, private consumption has been a strong support for the economy, and it is expected that now the lower tax rates will help keep private consumption strong. Festivals like Diwali and Christmas are ahead, considering which the rate cut on consumer durable products is expected to increase demand in a big way, offsetting the effects of revenue loss due to the move.

While debates on the aforesaid issue abound, it is widely agreed that the GST council’s another major decision -- to allow quarterly return filing for businesses with turnover of up to Rs 5 crore -- will prove beneficial. It will facilitate ease of doing business and particularly ease miseries of MSMEs. Also, increased compliance is expected. In his announcement, the Finance Minister said that a special meeting of the GST Council would be held on August 4 to further focus on MSMEs, and we will all eagerly await it.

I invite your opinions.

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Gst on electric rice cooker
JAWAHAR | Thu Jul 26 06:24:04 2018
Why is it still 28% gst for electric rice cooker.

GST rate cut
M GURUMURTY | Thu Jul 26 03:57:24 2018
It is very good decision. However, this type of information must to reach lowest consumers throgh TV media with the list of items and every village level to understand at common platform of villages through Village Administration.

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