The Goods and Services Tax (GST) Council is likely to approve a proposal on Saturday to amend a law for raising limit for the Composition Scheme meant for smaller assessees.

The meeting, to be chaired by the interim Finance Minister Piyush Goyal, will also take up the proposals to ease the return filing process besides lowering rates on goods such as sanitary napkins and handicrafts.

The amendment, once cleared by Parliament, will take the threshold limit for the Composition Scheme to 1.5 crore from the present 1 crore.

It means any traders or manufacturers, with annual turnover of ₹1.5 crore can be part of this special scheme. Under this, traders or manufacturers are required to pay GST just at the rate of 1 per cent of the total turnover. Similarly rate for restaurants not serving alcohol, will be charged GST at the rate of 5 per cent.

However, assessees under the Composition Scheme can neither collect GST from their customers nor avail Input Tax Credit (ITC) and are required to file the return on quarterly basis only.

Return-filing process

The Council will consider various proposals to simplify the return-filing process. This includes approval of the final version of new single return form and timeline for filing it.

The Council, in its earlier meeting did approve the new return form, but it needs to be given final touch after consultation with stakeholders and before putting for test. The Government aims to introduce the new form in three phases, all to be completed by next year. The new form will subsume GST 1, 2, 3 and 3B into just one single return form.

There was also talk about making return filing only once during the year. At present, assessees of the Composition Scheme and with turnover up to ₹1.5 crore can file their returns once in three months while assessees having turnover more than ₹1.5 crore need to file return on a monthly basis. “We need to say what best can be done in this regard but only annual return filing may not be possible at this moment,” a senior Government functionary told BusinessLine .

Rate cuts

The Council is expected to consider lowering rates on some items, including sanitary napkins and handicrafts. These are the items which have lower revenue implications, but higher perception value. These items currently attract GST of 12 per cent.

Though the demand for lowering GST on sanitary pads is getting louder, the Finance Ministry has maintained that lowering of rates will benefit foreign players as they will be able to flood the market with cheaper product because they will have to pay lower counter veiling duty (CVD). However, this argument has not served any purpose. Considering all these, there is a possibility that the GST Council may consider this proposal on July 21.

Under the GST regime, there are mainly four rates 5 per cent, 12 per cent, 18 per cent and 28 per cent beside two special rates of 0.25 per cent (on rough diamond) and 3 per cent (gold and silver). In an effort to rationalise rates, the GST Council had, in its meeting in January 2018, decided to slash the GST rate on 54 services and 29 items.

Similarly, in its November 2017 meeting, the council had removed 178 items from the highest 28 per cent category, while cutting tax on all restaurants outside starred-hotels to 5 per cent.

Tax collected

In the first year of GST, the government earned ₹7.41 lakh crore from the tax since its rollout in July 2017. The average monthly collection was ₹89,885 crore. In the current fiscal, the collections in April touched a record ₹1.03 lakh crore, followed by ₹94,016 crore in May and ₹95,610 crore in June.

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