GST or Goods and Services Tax is set for a midnight launch on June 30. Various government departments and agencies are working towards a seamless transition into the new indirect tax structure. The Central Board of Direct Taxes, under the purview of the Department of Revenue, has said GST will provide a "big relief" to small traders, manufacturers and restaurants. In most states, taxpayers like manufacturers, service providers and traders with annual turnover below Rs 20 lakh "need not pay any GST and need not register", according to the CBEC. This limit is Rs 10 lakh for Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Uttarakhand and Himachal Pradesh, it added.
Besides, those with annual turnover up to Rs 75 lakh can opt for the composition scheme, which enables them to pay tax at a flat rate without input credits. The composition scheme is optional and the limit is Rs 50 lakh in Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim and Himachal Pradesh, the CBEC said.
Eating out could get cheaper in some cases under GST. The new indirect tax system will subsume service tax and value-added tax (VAT) charged at restaurants. Air-conditioned restaurants will attract GST at the rate of 18 per cent on food bill. Non-AC restaurants will attract a 12 per cent GST. However, restaurants which have both AC and non-AC seating options will be charging service tax as per AC restaurants at 18 per cent.
The CBEC also explained the tax rates under the composition scheme:
|GST rate of Composition|
|Traders 1%||Manufacturers 2%||Restaurants 5%|
- In service sector, Composition Scheme is available only for one sector - restaurants
- The composition scheme is not available for manufacturers of tobacco and manufactured tobacco substitutes, pan-masala and ice-cream, and other edible ice, whether or not containing cocoa
- The dealers who opt for composition scheme have to file only one quarterly return with details of total turnover
- Invoice with details are not necessary and the bill of supply will suffice
- Small taxpayers are not required to give HSN code in their returns
- However, in this option, no input tax credit can be taken or passed on
- With online registration, return, payment, refund and other processes, delays and discretion would be reduced
- Reduced compliance burden
- Special dispensation for job work to help job workers in the GST regime