The GST Council, which is slated to meet today, is likely to decide on reducing the Goods and Services Tax (GST) on under-construction flats and houses from 12 per cent to 5 per cent, bringing relief to the homebuyers. The Council is also likely to provide relief to small and medium businesses by easing tax compliance limit and extending composition scheme to service sector.
The demand for reduction in the GST on cement from 28 per cent to 18 per cent is also being considered. The Council, headed by Finance Minister Arun Jaitley, is also likely to increase the threshold for GST registration to an annual turnover of up to Rs 50-75 crore. Businesses with a current annual turnover of up to Rs 20 lakh don't pay the indirect tax.
The CAIT said the taxes subsumed in value of the goods will encourage consumers to obtain Bills, which will augment the revenue.
"The efforts of the government to simplify and rationalise the tax structure is appreciable. But at the same time, the dip in the revenue collection is a matter of concern. Therefore, a mechanism is needed for easy collection of taxes by the traders and also more revenue could be generated," it said.
Praveen Khandelwal, CAIT secretary general, in a communication to the Finance Minister, said that the general tendency among consumers is not to pay tax due to higher rate of taxes and thereby avoiding taking bills while purchasing goods, which forces sizeable number of transactions across country to remain informal, causing loss of both direct and indirect tax revenue to the government.
Khandelwal suggested levying 3-stage GST in the supply chain.
"First, levy State Goods and Services Tax (SGST) & Central Goods and Services Tax (CGST) on first sale of a commodity in a state. Second, Integrated Goods and Services Tax (IGST) on inter-state transactions and thirdly, SGST & CGST on goods produced or manufactured in a state at the annual turnover of more than Rs 50 lakh," he said.
"Since the goods will be purchased in a state only after paying GST, therefore, the possibilities of tax evasion will not arise at all," he said.