Sunday, December 15, 2013

Government plans concessional GST

The following changes are made in the proposed Goods & Service Tax (GST) bill :

Earlier proposal: no tax for business with annual sales below Rs 25 lakhs

Proposed Additional SOP: Lower than standard  GST rate for manufacturers, service providers, dealers in Rs 25-75 lakh bracket

Objective: Making new tax regime acceptable to small businesses

The Caveat: Lower rate applicable only on intra – state sales by manufacturers, service providers and traders, all of whom will be categorized as dealers

Benefit: Service providers of Rs 10 lakh turnover can expand sales 7-fold and still pay only
compounded rate. For manufacturers with Rs 25 –75 lakh sales, impact may be cushioned to some extent. Traders with Rs 5- 10 lakh sales who pay state VAT need not pay GST upto Rs 25 lakhs sales, those with Rs 25 – 75 lakh sales to pay lower rate.

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