GST Council may cut rate on delivery services; new threshold for tax notices also on agenda
Proposals also include exemption for storage and warehousing of seeds meant for sowing, and standalone exemption for coffee curing services provided to cultivators
The upcoming 57th GST Council meeting is expected to consider a series of proposals aimed at rationalising GST rates, easing compliance and providing clarity on tax treatment across sectors, according to two senior government officials familiar with the proposals.
A key proposal is to reduce GST on delivery services provided by unregistered riders to platforms such as Swiggy and Zomato from 18 per cent to 5 per cent. The 5 per cent rate may also be extended to all delivery services for delivery of goods, shared the officials.
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Another significant compliance proposal under consideration is to raise the threshold below which tax authorities would not issue a show-cause notice or pass an order in cases of tax evasion or non-payment of tax, added officials.
“No show-cause notice or order to be passed against taxpayers where tax evasion or tax not paid is less than Rs 10,000; this limit was earlier Rs 1,000,” a senior official in the know of the proposal said.
The move, if approved, would seek to reduce administrative action in cases involving very small amounts of tax.
Tractor tyres
To ease compliances, the Council may deliberate on introducing a new optional scheme of return filing, namely, Annual Return Quarterly Payment Scheme (ARQP Scheme), which may be considered for small taxpayers having an aggregate turnover up to Rs 5 crore in the preceding financial year and making only B2C supplies, shared officials.
Officials also shared that tractor tyres may see GST cut too.
"The Council may consider reducing GST on retreaded tractor tyres from 18 per cent to 5 per cent, bringing them at par with new tractor tyres," officials said.
The proposals also include GST exemption for storage and warehousing of seeds meant for sowing and a standalone exemption for coffee curing services provided to cultivators, which is expected to come before the Council, officials said.
IGST exemption for missile-related imports too could be in the offing.
"Council may consider proposal to extend IGST exemption to imports of missile parts, spares, sub-assemblies, accessories, tools, testing equipment and related literature, in line with the existing BCD exemption," officials added.
Council could give relief on seven more rare diseases.
"The Council may also consider the addition of seven more rare diseases to the relevant GST exemption list, in line with the National Policy for Rare Diseases, 2021," said officials in the know of the agenda.
Adult diapers, water purifiers
On the demands of GST cuts on adult diapers, air and water purifiers, officials said that "Industry demands for a further reduction in GST on adult diapers and air and water purifiers are unlikely to be accepted."
If denied, then the existing 5 per cent GST on adult diapers may continue, while 18 per cent GST on air and water purifiers may remain unchanged.
EV transport and rental services too are likely to be discussed by the Council, they said.
"For certain electric vehicle transport and rental services, an option of 5 per cent GST with restricted ITC or 18 per cent GST with full ITC may be introduced," officials said.
Relief on the shipping sector is also likely to be discussed.
"An IGST exemption may be considered for certain services received by Indian establishments of foreign shipping lines from their overseas establishments. The GST treatment for the past period may also be regularised on an “as is where is” basis," according to the officials.
Services by SPFO
They further said that the GST exemption for services provided by the Seamen’s Provident Fund Organisation (SPFO) may be aligned with the treatment applicable to the EPFO.
The Council may also consider allowing ITC in the same line of business for hotel accommodation services up to Rs 7,500 per unit per day, fitness services and restaurant/outdoor catering services that currently attract 5 per cent GST without ITC, as per the officials.
Relaxation is also likely to be discussed on NBFC co-lending.
"A clarification may be issued that lending services provided by NBFCs to banks under co-lending arrangements are taxable. The value of such services may be based on the amount specified in the contractual agreement between the NBFC and the bank," shared two officials in the know of the agenda.
October 8 meeting
Next, for discussion, could be the demand to bring cruise tourism under a concessional 5 per cent GST rate is unlikely to be accepted, with 18 per cent GST expected to continue, officials said.
GST may also continue to apply to investor awareness and education payments made by Asset Management Companies (AMCs) to the Association of Mutual Funds in India (AMFI) for campaigns undertaken pursuant to SEBI directions, they said.
The proposal to treat such payments as outside the scope of GST is unlikely to be accepted, they added.
The proposals are expected to be considered by the GST Council on October 8 when the state finance ministers and Union Finance Minister Nirmala Sitharaman meet for the Council meeting.
