After reducing taxes for over 200 items in November, the GST Council has approved a change in the tax rates of 29 goods and 53 categories of services. Finance Minister Arun Jaitley said these rates will be effective from January 2.
The government is also thinking of simplifying tax returns for businesses. To enable this, the government is consulting with Infosys Chairman Nandan Nilekani as Infosys is the IT service provider for GST technological network. The government may also bring in petroleum and other exempt items within the purview of GST.
The finance minister is yet to reveal the goods and services as part of these 29 items. Sources say handicrafts may be brought down to zero percent. The council has also rationalised 49 other items.
There is a provision for logistics companies as well. The provision requires transporters to carry an electronic or e-way bill when moving goods of over Rs 50,000 in value between states. This will be implemented from February 1, and will help in checking tax evasion. Today, only 15 states decided to implement the provision for intra-state movements as well.
Once the e-way bill system is implemented, tax avoidance will become extremely difficult as the government will have details of all goods above the value of Rs 50,000 moved, and can spot the mismatch if either the supplier or the purchaser does not file tax returns, say experts.
GST collections with regard to the composition scheme have become a matter of concern for the government because there seems to be under-reporting under the composition scheme. Composition scheme allows small businesses to pay taxes at a concessional rate.
The government may announce a slew of tax incentives in the upcoming budget and we may also get to understand the impact of GST over the last eight months.