While the GST Council is expected to cut tax rates on some commodities, most notably cement, during Saturday's meeting, tax analysts do not expect a large number of rate cuts to take place. They do, however, expect greater clarity to do with the GST annual return form, around which there has been a lot of confusion.
“A rate cut could be on the cards because of some political compulsions,” Archit Gupta, founder and CEO, Cleartax told The Hindu. “One thing that is expected is a cut in the rate on cement, and something for regular housing such as under-construction properties.”
However, there are not likely to be a large number of rate cuts as industry expected following Prime Minister Narendra Modi’s statement on Tuesday saying that 99% of the items would be brought into the 18% or below rate slabs.
“Only about 34-35 items are in the 28% slab, and most [of them] are sin or luxury goods,” Mr. Gupta said. “So, it may not be an across-the-board cut, but there could be cuts for specific sectors.”
Levy on cement
The issue of tax rates on cement has been in the works for a while as it is expected to boost the infrastructure sector. Now, with the NITI Aayog vision document planning for a $4 trillion economy by 2022-23, demands for a boost to infrastructure through tax relief have regained steam.
“The cement industry has constantly been asking the government to look favourably at the development of infrastructure, and within that, at cement,” Mahendra Singhi, MD and CEO, Dalmia Cement (Bharat), said. “So, there has been a demand to reduce the GST rate from 28% to 18% or less. The government may look at this favourably since it ties in well into the vision of a $4 trillion economy by 2022.”
Another area that may see a rate cut could be the financial inclusion sector, according to industry bodies.
“The intent of the government should translate into action,” Anand Kumar Bajaj, chair of the communication committee of the Business Correspondent Federation of India (BCFI), said. “The PMO has told BCFI that they will make the GST nil for all the financial inclusion services across India. We are expecting that to be take up during the upcoming meeting. The rate is currently 18% but the impact is actually 27%.”
Apart from rates,tax analysts also say that the government was likely to provide more clarity about any changes it might be making to the annual return form — GSTR 9. The deadline for filing the duly filled up form has been shifted from December 31, 2018 to March 31, 2019 because the form had not been made available to filers in time.
“We are expecting something on the annual returns,” Mr. Gupta added. “They have postponed the deadline but some clarity on whether they will change some aspects of the form could be provided. That is very important because it is the next big thing coming up. The forms are to go live on the website on December 31.”
