GST Council Gives Relief To Transport, Tourism Sector

Giving some relief to the transport sector, the Goods and Services Tax (GST) council has cut GST on ropeways, on renting of goods carriage including fuel cost and exempted the foreign component of the tour package from GST.

The council has also waived the mandatory registration guidelines for the small businesses with annual turnover up to INR 40 lakh and INR 20 lakh for the goods and services, using e-commerce platforms to sell products and allowing them to opt for a composite scheme, benefitting about 1.2 lakhs small taxpayers.

Currently, suppliers supplying through e-commerce are required to take compulsory Goods and Services Tax (GST) registration. Also, businesses with a turnover of up to INR 1.5 crore and making e-commerce supplies would be allowed to opt for the composition scheme, which offers a lower rate of tax and simpler compliance.

Currently, businesses supplying through e-commerce cannot avail the composition scheme. The changes would bring in parity between entities who are doing businesses through either online and offline mode under GST.

It is leant to have recommended that GST on the transport of goods and passengers by ropeways be reduced from 18 per cent to 5 per cent with Input Tax Credit of services, to give relief to hilly states.

The council has also recommended that GST on renting of goods carriage with operators where the cost of fuel is included in the consideration be reduced from 18 per cent to 12 per cent. The council argued that reason for lower rates on transport of goods and passengers is that petrol, diesel, ATF are outside GST.

Good Transportation operators by road will now have the flexibility to opt for paying GST at 5 per cent without Input Tax Credit (ITC) or opting for paying GST at 12 per cent with ITC. The operators can switch from one option to another at the beginning of the Financial Year.

Currently transport of goods by road attracts GST at 5 per cent and 12 per cent and those who opt to pay GST at 12 per cent do not have the option to switch and they have to pay 12 per cent GST on all their consignments under forward charge.

The council has also recommended that in such cases proportionate value of the foreign component of the tour may be exempted from GST. Currently, in case of tours conducted partially in India and partially outside India such as Nepal or Bhutan, GST has to be paid on the price charged for the entire tour.