On August 24, 2020, the Finance Ministry of India announced that the Goods and Services Tax (GST) rates had been reduced. The said movie will ensure compliance and will be easier for taxpayers to pay their taxes. In a thread of tweets, Nirmala Sitharaman paid her respect to the Late former finance minister, Shri Arun Jaitley, on his first death anniversary, for his valuable contribution to the nation’s financial system, during his term from 2014 to 2019. He is well recognized for his role in implementing GST back on July 1, 2017.
Following were the notable points highlighted by the Finance Ministry:-
- Before the introduction of GST, a large number of indirect taxes (like Value Added Tax, Excise Duty, Central Sales Tax, etc.) and the ‘cascading effect’ (tax calculated on fee) were present. As a result, the standard rate of tax was high as 31 per cent in several cases;
- There were massive inefficiencies and high costs of compliance. In short, it was a burden on the taxpayer to comply with the requirements of the numerous indirect taxes. After the introduction of GST, the cumbersome procedures were reduced and was a huge relief to the taxpayers. In fact, the tax base doubled to 1.24 crores from 65 lakhs;
- With the GST rates reduced by the Ministry, the weighted GST rate has become 11.6 per cent. This is such a relief when compared to the earlier Revenue Neutral Rate (RNR) of 15.3 per cent;
- As GST being accepted as both ‘consumer and taxpayer-friendly’, the lowered GST rates has become more of an incentive for the taxpayers to pay their taxes;
- The highest GST tax slab rate of 28 per cent has been restricted to include the luxury items. 200 out of 230 items from the 28 per cent slab rate have been pushed down to the lower tax slab rate;
- The housing sector has been placed in the 5 per cent tax slab rate, whereas GST on affordable housing has been reduced to 1 per cent.
- The exemption limit of businesses has been increased to the Annual Turnover being Rs. 40 lakhs, from the earlier limit of Rs. 20 lakhs;
- Those with turnover up to Rs. 1.5 crores can opt for the Composition Scheme and have to pay only tax at 1 per cent;
- For smaller taxpayers with an Annual Turnover of up to Rs. 5 crores, the Rate of Interest for the late filing of GSTR-3B (consolidated monthly Return disclosing inward and outward supplies) have been halved to 9 per cent, provided if it is filed by September 30, 2020. Also, the compulsory Returns and Statements disclosing outward supplies to use digital signatures have been lightened;
The Finance Ministry further added that “All processes in GST have been fully automated. Till now, 50 crore Returns have been filed online and 131 crore e-way bills generated.”
With various relaxations being introduced in the Indirect Taxes Segment, this will be a huge relief to the taxpayer and will enable him to observe the laws even more diligently.