17 Jul 2018Posted By: Mudit Handa

What measures has the Government proposed to Rationalize the GST Structure in the near future?

The fact can never be negated that the no stone has been left unturned by the GST authority thus far, in facilitating hassle free and simplified tax compliances to all businesses across India. Till date, the GST council has repeatedly revamped different provisions under the Goods & Service Tax regime in order to mitigate the perplexities and to make the system more conducive for the average taxpayers.

As a step forward to ward off all the irregularities and complications from the system,  the central government has now sought to iron out the GST Purview by proposing a series of amendments in the CGST Act 2017.


#1. How will the government amend the GST tax structure in the coming days?


No doubt, the conduciveness of the GST regime is evident from the burgeoning success of GST registration procedure in India and increasing compliance rate.

With the successful completion of one year of GST, the government has now decided to roll out several measures with regard to rationalization of the GST tax structure, which includes repealing of the maximum GST cap of 28% and revoking of reverse charge, that will soon be brought into effect at the 28th GST council meet, which is scheduled to be held on 21st of July, 2018 .  


#2. Why has the government decided to roll back 28% GST rate?


Notwithstanding the favorability of India’s GST, the fact is known far and wide that India has the highest rate of GST in the world, which is 28%. This had incited much apprehension in the minds of critics who considered the tax regime to be repressive and anti-poor. In a bid to introduce anti-profiteering reforms into the indirect taxation system, the GST Council has decided to roll back the maximum GST rate of 28%. This has been seen by the government as the measure to rationalize the GST rate.  However, the maximum GST cap will continue to exist in case of luxury & sin products.


#3. How will the decision to lower maximum GST rate affect the tax revenue?

According to the GST authority, the nation is on the edge of attaining fiscal consolidation with the steady expansion of the tax base. After reporting the record monthly GST collection of ₹ 1.03 lakh crores in April 2018, the tax authorities have hit the target of above ₹ 90,000 crores in the successive 2 months as follows-

  • May 2018- ₹ 95,610 crores
  • June 2018- ₹ 94,016 crores

Noticing the expanse of the tax base as explained above, the GST Council’s decision to rationalise the rate can be deemed as opportune for the masses and favourable for the government budget.  


#4. Why has the government proposed to repeal reverse charge in GST?

Since its suspension in the 26th GST council meeting, the issue of Reverse Charge Mechanism (RCM) was put on hold and was deferred in the successive GST meetings. it has now come out that the provision of RCM u/s 9(4) of CGST Act 2017, which was hitherto deferred till 30th September 2018, will be soon deleted from the Act.

The Reverse Charge Mechanism (RCM) is a provision wherein a taxpayer who has undergone GST registration buys certain taxable goods & services from an unregistered supplier, will have to incur the GST liability for such goods & services. However, the experts have envisioned this clause as the discrimination between registered & unregistered taxpayer. Perhaps, this is why the GST authorities have proposed to eliminate the reverse charge from the GST ambit.


#5. What has the government proposed for enhancement of GST return filing procedure?

The government has laid stress on the simplification of the GST return filing process, although no concrete action plan has been put forth in this regard yet.


#6. How will the basic amenities provided by the employer to the employee be treated under GST?

As per the section 17(5) of the CGST Act 2017, some basic amenities provided by the employer to the employee such as food & beverages, health services, outdoor catering, beauty treatment,  etc.; except where such goods & services are procured for making an outward supply; were devoid of any input credit. However, the government has proposed to allow the input credit on such goods & services to the employers.  


#7. What proposal has the government introduced for the E-commerce operators?

The GST Authority has proposed that the GST registration must be made mandatory for the E-commerce operators who are required to collect Tax Collected at Source (TCS) u/s 52 of CGST Act 2017.


#8. How much is the threshold limit for the composition scheme to be raised?

The GST council has opined that the threshold limit for GST registration in India under the composition scheme must be raised from ₹1 crore to ₹1.5 crore. This is truly justifiable as the small traders witnessing a rise in their turnover must be incurring a proportionate rise in expenses. The increase in the upper limit to get GST registration under composition scheme can really benefit them.

#9. Which amendment is to be done with regard to timely payment of GST Liability?

If an individual fails to settle his GST Liability within 180 days from the date of issue of invoice for the goods & services, input credit availed by that person is added to his output tax liability along with an interest u/s 16(2) CGST Act 2017. The government has now decided to remove the interest liability from this section.


All in all, the proposals for amendment of CGST Act are reasonable and they all depict the populist agenda of the government.

All you need to know about 

If you have any queries regarding GST registration procedure or need any assistance with GST Return Filling, feel free to contact us at 8881-069-069.   


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