GST Rate Change: CBIC Outreach for Smooth Transition

New Delhi, Sep 9 (PTI) With the reduced GST rates on 375 items set to be effective from September 22, Central Board of Indirect Taxes and Customs (CBIC) Chief Sanjay Kumar Agarwal has underlined the need for "proactive outreach" by tax officers to handhold trade and industry in navigating the transition smoothly.

He said greater awareness will not only minimise confusion but also enable businesses, particularly small traders and MSMEs, to adapt seamlessly and fully benefit from the reforms.

The GST Council, in its meeting last week, has approved to make Goods and Services Tax (GST) a two-tier structure of 5 and 18 per cent, with a special rate of 40 per cent on tobacco and related products and ultra-luxury items.

The new rates will be effective September 22, barring tobacco and related products, which would continue to be taxed at 28 per cent plus a compensation cess till December 31.

Currently, GST is levied in the slabs of 5, 12, 18 and 28 per cent.

In his weekly newsletter to tax officers, Agarwal said lower tax incidence on common man essentials will reduce household expenses, while affordable inputs for farmers, artisans, and manufacturers will boost production, employment and exports.

These reforms are not just about rate cuts - they represent a paradigm shift towards a fairer and more citizen-centric tax framework, he said.

"As these transformative reforms take effect, the need of the hour is to handhold the trade and industry in navigating the transition smoothly. Proactive outreach and effective interactions will be crucial to ensure that taxpayers clearly understand the revised tax rates and compliance simplifications," Agarwal wrote in the letter.

Greater awareness will not only minimise confusion but also enable businesses, particularly small traders and MSMEs, to adapt seamlessly and fully benefit from the reforms, he added.

Agarwal said the process reforms will ensure ease of doing business for all, especially small traders and businesses.

The 56th GST Council meeting also decided to start a simplified GST Registration scheme for small and low-risk businesses from November 1.

Under the optional simplified GST registration scheme, registration shall be granted on an automated basis within three working days from the date of submission of application in case of low risk applicants and applicants who based on their own assessment, determine that their output tax liability on supplies to registered persons will not exceed Rs 2.5 lakh per month (inclusive of CGST, SGST/UTGST and IGST). The scheme will provide for voluntary opting into and withdrawal from the scheme.

The Council also approved faster clearance of refunds arising out of the inverted duty structure, as well as those claims arising out of zero-rated supply of goods or services.