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GST rate structure needs rejig, says Hasmukh Adhia

‘Will help ease burden on small businesses’

Some rejig in the Goods and Services Tax (GST) rate structure is required to reduce the burden on small and medium businesses, Revenue Secretary Hasmukh Adhia said on Sunday.

The GST, which amalgamates more than a dozen Central and State levies including excise duty, service tax and VAT, will take a year to stabilise, Mr Adhia told PTI.

“There is a need for some rejig in rates... It is possible that some items in the same chapter are divided. There is a need for harmonisation of items chapter-wise and wherever we find there is a big burden on small and medium businesses and on the common man, if we bring them down, there will be a better compliance,” he said.

Nearly four months since its introduction, the new indirect tax has faced teething troubles and compliance issues, which the GST Council — the highest decision-making body of the new regime — has addressed through several changes, the Revenue Secretary said. To remove the hassles being faced by medium and small businesses in tax payment and filing of GST returns, it has tweaked various aspects of the new regime.

The GST Council has also rationalised rates on over 100 commodities and made the refund process easier for exporters.

Mr. Adhia, however, said the rejig would require some calculations by the fitment committee, which will decide which items need rationalisation of rates under the GST regime that came into force on July 1.

Approach paper cleared

The GST Council has cleared an approach paper for items to be considered for rationalisation, but it is not binding and the Council can always make deviations from the approach paper, Mr. Adhia said. “We are very keen to do it as early as possible... it depends on how much time the fitment committee takes to work on it. They need data to calculate revenue loss. They need various comparisons. But harmonisation has to be done,” he said.

The 23rd meeting of the GST Council, chaired by Union Finance Minister Arun Jaitley and comprising representatives of all the States, will be held in Guwahati on November 10. The GST Council has reworked various provisions to make it more industry friendly. The turnover threshold for composition scheme, under which businesses can pay taxes at a nominal rate, has been increased to Rs. 1 crore from Rs. 75 lakh. Small businesses with up to Rs. 1.50 crore in turnover have been allowed to file returns and pay taxes quarterly, as against monthly payments.

Asked how much time it would take to stabilise the GST system, Mr. Adhia said: “It will take one year. Because it is a new system for everybody... There has been a complete overhauling of the tax system in the GST, so one year is needed.”

“If you see the experience of VAT, there was opposition for one year. People were on the streets because nobody knew what VAT was,” he said.

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