GST Council may review rates on auto sector

Easing annual return filing procedure and rationalising rates on lottery may also be on the agenda at today’s meeting

Updated - September 19, 2019 10:42 pm IST

Published - September 19, 2019 10:27 pm IST - NEW DELHI

Tough times: There seems to be no clarity if the slump in the automobile sector is due to high taxes.

Tough times: There seems to be no clarity if the slump in the automobile sector is due to high taxes.

The Goods and Services Tax (GST) Council is likely to discuss the viability of a tax rate cut for the automobile sector, easing the annual return filing procedure for small businesses and possibly rationalise the two different rates on lotteries at its 37th meeting to be held in Goa on Friday, according to tax analysts.

“The auto industry is demanding a GST rate cut from 28% to 18%,” said Ankit Agarwal, MD, Alankit Ltd.

Lower levy on FMCG

“The concerns related to the automobile industry will be taken up in the upcoming Council meeting. The Council may also lower levies on items such as biscuits,” he said. There is, however, no consensus on whether the Council will actually reduce the GST rates on automobiles since it is not clear that the downturn in the industry is due to high rates of tax.

“While the auto industry is pushing for a GST rate-cut at the meeting, the chances of the Council considering the same do not seem very likely as there are several factors contributing to the slump in auto sales, besides GST,” said Archit Gupta, founder and CEO, ClearTax.

“The declining GST revenue collections also do not provide much hope at the moment, either, for rate cuts in this sector. Further, the view is that a rate cut given to boost one particular sector will lead to other sectors also demanding the same treatment,” said Mr. Gupta.

The other major decision that is likely to be taken is exempting small business from filing the GSTR-9 annual return forms.

These forms have come under much criticism for being too complex and asking for data that businesses, especially smaller ones, cannot furnish.

“The Council may exempt small taxpayers with annual turnover up to ₹2 crore or up to ₹5 crore from filing annual returns for a year or so,” Mr. Agarwal said. “The proposed step would ease compliance burden and subsequently help tax authorities focus on big assesses.”

“The industry is also hopeful that the government would provide the road map and corresponding timelines with regard to implementation of the new GST returns and e-invoicing which should further ease the compliance under the GST regime,” Mahesh Jaising, partner, Deloitte India, said.

Mr. Gupta, however, said the government should instead focus on easing the annual return filing procedure and forms rather than doing away with them.

GSTR-9 complexities

“We strongly feel the complexities of filing form GSTR-9 should be reviewed,” Mr. Gupta said. “The filing deadline has been extended for the fourth time. We are expecting the Council to consider a simplified version of the form which will rationalise several parts of this annual return.”

The other aspects that could come up for discussion may be distribution of taxes between the Centre and the States, and also the possibility of combining the two existing rates of 28% and 12% for lotteries into a single rate.

“The GST Council will interact with the Finance Commission during the September 20 meeting and will suggest the formula for the distribution of taxes between the Centre and the States for a five-year period starting April 1, 2020,” Mr. Agarwal said.

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