PM Modi likely to lower cap of GST?

New Delhi: With Gujarat chief minister Vijay Rupani saying on Sunday that the Narendra Modi government was trying to resolve problems being faced by small businesses in the aftermath of the GST implementation, speculation is rife that Prime Minister Narendra Modi could lower the cap of Goods and Services Tax (GST). In Gujarat, the ruling BJP is worried that the traders were upset following GST issues and might switch their allegiance to the Opposition, particularly the Congress.

Mr Rupani’s comments were directed at the traders community in Gujarat, which is considered a vote bank of the BJP. He said there have been some disruptions because of the GST, but the Modi government is trying to resolve all issues facing people.

He claimed that traders had been asking for GST for a long time since they believe that it is good for business.

“They understand that there are always issues when a new system comes in. PM Modi had said that he would review the GST in three months and he did so. He is doing everything to help people. In the last GST Council meeting, the government took note of concerns of traders and came with solution,” Mr Rupani said.

He said that the Centre was again looking at steps to ease the burden on the small traders as far as implementation of GST was concerned.  

In Delhi, a committee under Assam finance minister Himanta Biswa Sarma set up to look at various options to make composition scheme for the small traders more attractive met on Sunday.

At present, small traders who opt for the composition scheme can not send their goods to others states.

The committee is looking at giving option of inter-state trade to businesses who opt for the composition scheme to make it more attractive.

Under composition scheme, the compliance burden on traders is less and they have to pay a nominal tax on overall income. Traders availing composition scheme have to just pay 1 per cent tax on the income, manufacturers have to pay 2 per cent and restaurants have to pay 5 per cent tax. However, the scheme implemented to ease burden on the small traders has not been successful with only over 15.50 lakh businesses out of 98 lakh registered under the GST regime opting for the composition scheme.

Earlier this month, the 22nd meeting of GST Council had decided to raise threshold to avail composition scheme to turnover of Rs 1 crore against present Rs 75 lakh. The committee is also looking at options to reduce GST on restaurants from the current 18 per cent.

The steps most possibly are being taken to ensure that small traders, who reports have indicated are unhappy with the BJP over implementation of GST, do not switch to Opposition parties.