The Goods and Services Tax will make several household commodities like soap cheaper, as well as keep small businesses with a turnover of less than ₹75 lakh out of the purview of the full-fledged indirect tax regime, Finance Minister Arun Jaitley said on Tuesday.
‘Equivalence principle’
“The equivalence principle followed in setting the rates in GST was based on what the rate on a good or service was prior to June 30 combining the centre’s excise duty and the states’ VAT,” Mr. Jaitley said while speaking at a GST conference organised by the ABP Group. “Household items like soap, which were earlier taxed at 31% combining central and state taxes, will now be in the 18% bracket.”
“The socio-economic nature of the country is changing, and also goods such as these are used by the common man, and so it was decided to tax them at this rate,” the Finance Minister added. “However, keeping revenue neutrality in mind, the Government cannot lower tax revenue by too much so that it doesn’t itself have enough income to meet its needed expenditure.”
Mr. Jaitley said that companies with a turnover of less than ₹20 lakh need pay no tax under GST, while those earning less than ₹75 lakh would fall under the composition scheme that allows them to file quarterly returns at lower tax rates as opposed to the monthly filing requirement of GST.
