The Goods and Services Tax Council has approved measures to ease burden of compliance on businesses, sources told NDTV Wednesday evening. The measures approved include reduction of registration time for MSMEs, i.e., medium, small, and micro enterprises, and start-ups from 30 days to just three. A proposal for automated GST refunds for exporters was also cleared.
The council began its two-day meet this morning with the rationalisation of GST tax slabs as the big-ticket item on its agenda. The government is planning to cut existing tax brackets by half.
The current system has four slabs – five, 12, 18, and 28 per cent.
The government plans to drop 90 per cent of goods in the 28 per cent category to the 18 per cent bracket, and drop a chunk from the 12 per cent to the five per cent slab. This is expected to boost middle class consumption and offset the Rs 50,000 crore expected revenue loss.
However, certain ‘luxury’ items, such as tobacco and high-end cars, as well as liquor, will continue to attract the ‘sin goods’ tag and, this time, a Health Cess or a Green Energy Cess.
These have been suggested as a replacement for the expiring Compensation Cess.
There is also a proposal to exempt life and health insurance premium from the GST framework. At present these attract 18 per cent tax.