In a massive overhaul of the Goods and Services Tax, the Centre and states are all reviewing almost half of its items in the top bracket of 28 per cent, even allowing larger firms to file returns once a quarter instead of every month. A senior official said that the fitment committee is looking at proposals to pare rates on 150-200 items, with a majority of them being from the top bracket. The main concern for the Centre is finances as it has committed to compensate the states for revenue, while ensuring that it sticks to the fiscal consolidation plan.
A source said, “A large number of items which were not part of any schedule faced 14 per cent tax and all these have moved into the top bracket. The idea is to limit the 28 per cent levy to sin and luxury goods.” The review comes amid reports that the government has raised the levy on several goods and services and growing instances of evasion, where shopkeepers are insisting that the payment be made by cash instead of through electronic means. Finance Minister Arun Jaitley has already indicated his backing for single standard rate, currently split into 12 per cent and 18 per cent.
A panel of five state ministers has suggested doing away with the detailed break-up in the bills issued to consumers and instead revert to the earlier system of saying that the price is inclusive of all taxes. “The ministers have looked at the practice in other countries, such as Australia, and no one follows this model,” an officer said. The ministerial panel has also recommended that all companies be allowed to file returns on a quarterly basis to do away with complaints of higher compliance burden. It has talked about a steep cut in late fee paid by those who miss the deadline from Rs 200 to Rs 50.