Source: The Hindu Business Line
Ahead of the planned GST rollout from July 1, 2017, the GST Schedules on rates for goods and services were released during the two-day meeting of the 14th GST Council. The GST Council also finalised seven GST Rules across invoices, valuation, input tax credit, payments, refund, registration and composition, along with final formats.
Businesses can now begin planning the transition to the GST regime. In the rate schedule, it appears that the tax incidence is the same for most products, apart from distortions across select products like small-sized motor vehicles, which are subject to peak GST rate of 28 per cent, along with compensation cess ranging from 1 per cent to 3 per cent. As per industry expectation, large cars and SUVs will attract the peak GST rate, along with compensation cess of 15 per cent.
On the services side, the education sector and the healthcare sector will be exempt from GST, while telecom and financial services will be subject to GST at 18 per cent. Additionally, transportation of passengers by road, railways and air will be taxed at 5 per cent and GST on hotel services will range from nil to 28 per cent.
Most of the final GST Rules have been released along with the formats, so businesses can prepare their IT systems to raise GST-compliant invoices and otherwise prepare to meet reporting requirements under the GSTN portal. An important step towards transitioning to GST would be around taking the decision on pricing of products for re-negotiating contracts with immediate vendors and buyers. The GST Council is yet to finalise the Transition Rules and return formats.
The issues surrounding how to file returns under various laws, that is, excise duty, service tax and VAT/ CST and aligning them to the closing returns date of June 30, 2017 (for GST implementation on July 1, 2017) are still open. There are no updates on the pilot testing of the GSTN portal.
Businesses will be keenly looking to the next GST Council meeting scheduled for June 3 for further developments.