What is GST?
Before GST businessmen and the consumers in India had to pay 17 different types of taxes like sales tax, excise duty, octroi, etc. As the suppliers and manufacturers had to pay varied taxes along with their input, the cost was passed down to the customer, making the goods expensive.
On July 1, 2017 GST was implemented across India with uniform state and central government taxes. These are SGST (state goods and services tax), CGST (central goods service tax) and IGST (integrated goods and services tax).
For the past three years, Indian businessmen and consumers have paid GST (goods and services tax) on sale and consumption of goods. However, the economic slowdown might result in a shortfall in the government’s GST collection for the financial year 2019-2020. The Indian trade industry has now begun to dread a revision in GST rates by the government in the 2020 Budget, to meet this shortfall in revenue. Fortunately, no such decision has been made till now.
Here is a lowdown on what tax-payers can expect in terms of GST in the 2020 budget:
1) Relaxation of GST in long term leases
The government charges 18% GST on long term leases of land. But it is now mulling over whether to exempt long term leases of 30 years and above from GST. This would be in cases where the land belongs to the state government or the central government has a 20% stake in it. However, a five percent temporary tax will be levied on short term leases.
2) GST exemption on long term leases to boost setting up of production plants
This step is expected to boost investments to set up new industrial units. With GST free land leases, those wanting to start their own manufacturing plants can do so easily. If you are looking to grow your business with new age infrastructure, you can conveniently do so with a Bajaj Finserv Business Loan on Finserv MARKETS. With the business loan available on Finserv MARKETS, you can not only invest in infrastructure, but also invest in working capital, upgrade to new-age machinery, and maintain optimum inventory. The Bajaj Finserv business loan on Finserv MARKETS, can provide you with pre-approved business loans of upto Rs 30 Lakhs for the same.
3) Single window GST refund disbursal for exporters
There is good news for exporters who were at the mercy of state and central government tax officers to get their GST refunds approved. A single window refund disbursal mechanism will be set up to sanction these refunds.
Currently, since the GST revenue is divided between the state and the center, the exporter had to approach the state tax officer for 50 % of his SGST refund and then the central tax officer for the IGST disbursal.
4) Your lottery ticket gets expensive
Those who like to try their luck with the lottery will have to shell out a bit more money. The government has decided to levy a uniform GST of 28% on lotteries. Earlier, the state government charged 18 % on intra-state lotteries while it was 18 % on inter-state lotteries.
5) No tax hike as of yet on packaged food
The packaged and ready-to-eat food industry expected a revision of GST rates to 18 % from the current 12%, but no decision has been taken yet. All eyes will be on the next GST council meeting.
Older rate revisions
When GST was introduced in 2017, the rates were in the range of 5%, 12%, 18% and 28%. In 2018, the GST rate for products which were taxed at 12% was reduced to 5 % and those in the 28 % category was reduced to 18%. In 2019, GST rate on certain goods and services was further reduced. For instance, GST on marine fuel, wet stone grinders was reduced to 5% from 18%. Almond milk was, however, bought under a GST rate of 18%
Goods exempted from GST
Goods like meat, dairy, eggs, honey, plants, trees, vegetables, fruits, dry fruits, books, brochures, newspapers, are GST free. The list, however, is bound to change if the government wants to increase its tax ambit.
With very little to no GST on long term land leases, no hike on packaged foods and other products, we await the 2020 Budget, which promises to provide necessary impetus for growth to the Indian economy.
While the Indian government takes the necessary steps to boost our economy, you can take some simple steps to help boost your business. By availing a Bajaj Finserv Business Loan on Finserv MARKETS, you can help your business beat the slowdown and reach new heights, With speedy approvals, lightning quick disbursals, minimum documentation and zero collateral requirement, you can avail a business loan from the comfort of your own home in no time!
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