The 37th meeting of the GST Council, to be chaired by Finance Minister Nirmala Sitharaman on Friday, is expected to witness States raising issues beyond the formal agenda.

The formal agenda for the meeting includes rate revision proposals for various sectors, including automobiles, biscuit and hotels. There is also a proposal to exempt small GST assessees from filing the annual return at least for the first year — 2017-18 — and staggering the return dates for different categories of assessees. Beyond this, States are seeking simplification of annual returns, specially for bigger assessees.

States feel that though the number of bigger assessees is less, they pay higher tax. “It is not part of the agenda, but we will seek simplification of returns for the bigger assessees,” one state Minister said.

Indications are that given the views of the Fitment Committee (Committee of tax officials from Centre and States which give its views on tax revision proposals), rate cuts for automobile and biscuits, may not happen. However, rate revision for hotels, outdoor catering and matchsticks, beside some small items may happen. There is a view that rate cut on automobiles could result in loss of up to ₹50,000 crore, while there is no rationale in rate cuts for biscuits.

Though there is a possibility that some States such as West Bengal and Punjab could support rate cut for automobiles, it will be opposed by all NDA-ruling States and even non-NDA State such as Kerala. There is no such move expected on biscuits.

Expected rate revision

On hotel tariffs, the Council could consider raising the threshold from ₹7,500 to, say, ₹10,000 or more for 28 per cent GST. Similarly, the ceiling for 18 per cent GST rate could also go up. Supply of food/drinks in outdoor catering attracts 18 per cent GST. Many offices get food supply from outside caterers, and they therefore have to pay 18 per cent GST even for non air-conditioned canteens. Industry feels that cut in the rate will lower the employee cost.

Changes in returns

The Council will consider a proposal for exempting businesses with a turnover of up to ₹2 crore from filing annual returns for 2017-18. This will cover 86 per cent of total assessees. All assessees are required to fill the annual return for 2017-18 by November 30. The due date for filing annual return for 2018-19 in December 31. There is no proposal, as yet, to extend this date.

There is also a proposal to allow different categories of taxpayers to file monthly returns on different dates. This will ease the compliance of new return forms, to be effective for all categories of tax payers from January 2020. As of now, monthly returns must be filed by the 20th of next month while there is quarterly return for composition scheme dealer.

One of the key areas of concern in filing the annual returns is bifurcation of input tax credit (ITC) which requires distribution of ITC taken during the year into capital goods, inputs and input services.

The Council is expected to consider roughly 80 proposals related to rates, procedures and simplification. The focus will be mainly on ease of doing business.

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