GST relief for transport and tourism sectors, small online businesses

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The Goods and Services Tax (GST) Council slashed tax rates on transportation through ropeways and renting of goods carriage and exempted foreign component of tour packages from the tax, providing significant relief to transport and tourism sectors.

The council also offered relief to small businesses selling through the ecommerce route by waiving compulsory GST registration.

It recommended that GST on the

goods and passengers by ropeways be reduced from 18% to 5% with an input tax credit.

It recommended GST on renting goods carriage with operators where the cost of fuel is included in the consideration be reduced to 12% from 18%.

The council argued that the reason for lower rates on the transport of goods and passengers is that petrol, diesel, and aviation fuel are outside the GST.

Road transporters will now have the flexibility to opt for paying GST at 5% without input tax credit or GST at 12% with such credit. The option will be available at the beginning of a financial year.

Currently, transport of goods by road attracts GST at the same rates but there is no option to switch from one rate to the other.

In a relief to mixed local and foreign tour packages offered to a foreign tourist, the proportionate value of the foreign component of the tour may be exempted from GST.

At present, in the case of tours conducted partially in India and partially outside India such as Nepal or Bhutan, GST is levied on the entire package.

Relief to small ecomm business

The council has also waived compulsory GST registration for small businesses using ecommerce platforms. The relief is available to firms with annual turnover of up to ₹40 lakh and ₹20 lakh for goods and services, respectively.

Currently, all the suppliers selling through ecommerce are required to take compulsory GST registration.

The move is expected to be implemented from January 2023, as it would require technical changes to be made on the portal, people aware of the matter said.

The GST council has also allowed ecommerce vendors with a turnover of up to ₹1.5 crore to opt for the composition scheme, which offers a lower rate of tax and simpler compliance, a move that would benefit about 120,000 small businesses.

Currently, businesses supplying through ecommerce cannot avail of the composition scheme.

The changes would bring parity between offline and online modes of delivery of goods and services.