Latest Updates in GST : Increasing Duties and More

GST or Goods and services tax is the latest tax system followed in the entire nation. The tax system follows capping various businesses under certain tax brackets. By this way it becomes easy to identify the tax bracket for every business. Also due to the GST application the system has become very crystal clear and tax evasion has been reduced since then. The biggest achievement for the government every month is looking at the numbers of GST income. The income for the June month stood at 1.44 Lakh Crore Rs. This was 56% higher if calculated on a YOY basis. The highest ever collection till date was noticed in April 2022 at 1.68 Lakh Crore Rs. However due to inflation the businesses have slowed down and this has resulted in less collection of tax the previous month. 

The government has increased the tax Bracket on certain products and even withdrawn some of the exemptions given previously. This will result in more earnings for the government in this time of high inflation. 

GST Modifications

The first and foremost change is to charge fees from banks on the issue of cheques. The GST council removed the exception clause from this business. 

The major decision taken are as follows :-

• Pre packed food items will now attract 5% GST on them. This includes paneer, curd, honey etc.
• Even unbranded items such as flour, rice etc. will attract 5% GST if they are pre-packed or labelled. The reason to include the same under the tax bracket is that as of now only branded items were taxed.
• Dried vegetables, dried makhana, jaggery, wheat, meslin flour and other cereals, puffed rice, coir pith compost will now attract 5% GST.
• The rate hikes were also a part of the GST meeting. Items like writing and drawing ink, spoons, tableware, knives, printing, dairy machinery, LED Lamps, drawing instruments etc will attract 18% GST from 12%.
• 12% GST will be levied on hotel rooms with a daily charge of less than 1000 Rs per day. This segment was under tax exemption as of now. This also includes hospital accommodation that is less than 5000 Rs per day.

One exemption continues in this time’s GST meeting as well. This includes the exemption on unpacked, un-branded and un-labelled items. 

Two major recommendations were made in the meeting. The council is thinking to amend the inverted duty structure on edible oils, coal, LED lamps, finished leather, printing / drawing ink, solar water heater etc. 

Another such move includes 28% uniform tax application on online gaming, horse racing, casinos etc.

Why the Amendments ?

The current times have been tough for the government and the entire economy. The reason is inflation. The government is struggling to get through this phase as the inflation has caused the prices of every service and goods to rise drastically. This has forced the central bank to increase the interest rates. Thus the liquidity flow has been minimal and even the businesses have slowed down. This will mean less tax for the government. Thus the government has increased taxes on many things. The exemptions have also been lifted on multiple things. 

Clarifications from the Government

The government has issued major clarifications on multiple tax rates. A 5% tax has been levied on electric vehicles. However the government made it clear that it is applicable. The clarifications were also made for the preferential location charges as a part of consideration for land. Thus the clarification made would benefit the auto industry. The reason is if the auto companies sell the electric products without battery packs then they will get 5% savings on their sale. Also the PLC or preferential location charges clarification will reduce the cost to consumers and benefit the buyers.  

Other Information

The online business has been made easy by the government. Online trade has been made easy as the government has waived the GST registration being mandatory for supply of goods. The decision is applicable on the people below the prescribed threshold limit. The composition tax payers are also allowed to operate through online platforms. This scheme is currently into application and will be applicable from 1st January, 2023.

The council will exclude the period of 1st March, 2020 to 28th February, 2022 for filing refund applications for issuance of demand / order for the erroneous funds. This will reduce the litigation pending for rejection of refunds.

The Council has also suggested setting up a GST tribunal. This will make the taxpayer’s work easy as they won’t have to wait for their litigations to get passed. However this will make sure that the queries and complaints are resolved in a timely manner. Thus GST is getting simple to access for the taxpayers. 

The taxpayers are getting direct access to the online services given by the GST portal. Also interaction is possible on it which makes the task easier for the taxpayers to get desired knowledge about the system.