Union Budget 2025 proposes several changes under GST aimed at promoting economic growth and addressing industry-specific challenges. For tourism in Kerala, a reduction in GST from 18% to 5% on activities like elephant rides and trekking is suggested to boost local tourism. Builders have proposed an option for project-based GST compounding or non-compounding, similar to pre-GST practices, to help manage input tax credit and reduce apartment construction costs. For small service providers, the turnover limit for compounding eligibility may be raised from ₹50 lakhs to ₹1 crore, easing financial pressure on MSMEs. Exporters face refund challenges, with requests to simplify refund processes and address issues arising from erroneous refunds, backed by a Kerala High Court ruling. The Amnesty Scheme 2024, designed for GST compliance issues from the early regime, has limitations, prompting requests for extended deadlines and inclusion of Section 74 cases.
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Reduction In GST Rate On Tourist Places
1. To encourage tourism and allied activities in the State of Kerala, State Government is promoting several programs to attract people to various tourist places in Kerala. In this connection hilltop places like Munnar, Vagamon, Idukki etc., elephant ride, trucking, cable car is widely used to the tourists. Here GST rate is applicable for such entertainment activities @ 18%. Let us explain this issue with an eg. as below:
(i) For elephant ride, a customer is brought to the tourist place and charging Rs.1000/-. Commission to be given for the broker to bring this customer comes to Rs.400/-. Daily wages of the mahout (pappan) of the elephant per day Rs.5000/-. Food and other expenses to the elephant per day as Rs.500/-. In short the net profit from a customer getting only Rs.200/- out of which GST now applicable is 18%. Hence the net profit only Rs.164/-. In this situation we request to consider for a concessional rate of GST @ 5% only instead of the existing rate of 18%. The State of Kerala named as God’s own Country for which the revenue from tourism is a significant contribution to the State revenue.
Option To Compounding for Builders
2. Rate of tax applicable for the builder at present under GST two types. (i) affordable residential units @ 1%, (ii) others 5%.
It is respectfully submitted that there is no provision to utilize input tax credit for the purchases effected by the developer/builder for the construction of above flats. Moreover Reverse Charge Mechanism liability also to be discharged for certain unregistered purchases viz share of flat belongs to the land lord. In short the facility to avail ITC has been denied for all the builders which resulted in the increase in cost of sqft. rate belongs to the Apartments. The approval of RERA for each project, system of accounting also project wise, along with an option to compound the amount project wise or regular method to discharge the tax liability (non compounding method) may be considered in the coming budget. In short the commencement of each project an option can be given to the builder either to compound the project or opt for non-compounding method. In the case of non compound method, builder has the facility to avail GST on every purchases including cement with gst rate comes to 28%. Besides builder will be compelled to make all purchase from registered dealers also. It is further submitted that during the pre GST period in the case Central, Service Tax Law and State VAT Law for the works contractors and builders the above two category of option (namely compounding rate and non compounding rate) were applicable in this segment. Therefore you are requested to consider this method of option for each project from the financial year 2025 April onwards.
Concession To Compounding Dealers (Service)
3. At present compounding for the tax payer for goods in a financial year turnover up to Rs.1.5cr is eligible for pay tax @ 1%. Similarly, in the case of services it is limited to Rs.50 lakh in a financial year. In the case of small contractors, labour contractors, maintenance contract like electrical, plumbing areas where this concessional rate of tax may be applied. The present ceiling of 50 lakhs, the applicable rate is 6% without ITC. This ceiling may be considered at least to the limit of 1cr for the service industry. It will be a blessing to MSME and small contractors to get more work and more profit for their better existence in the society.
GST Refund For Exporters
4. Exporting industry is doing an excellent job in their business and bringing substantial amount of foreign exchange to the Government exchequer. However, the refund liable to them as per Section 54 is not smooth in the present flat form. It means several exporters are struggling for getting the refund in time. Certain exporters who are importing the raw materials using the advance license also faced with several crises in the refund. Importing the raw materials, manufacturers of goods using such material and re exporting with GST was also permitted in the initial period of GST. After the amendment of Section 96(10) also several Officers Suo Moto granted refund after verifying the bill of lading and register of foreign exchange. After wards the same authorities asked to refund this amount under the label of “erroneous refund” along with interest @ 18%. Such complications also resulted in financial crises for the exporters and this approach in complicating the procedure of refund which is to be avoided in future. In the recent judgment of Kerala High Court in M/s. Sance Laboratories Private Ltd., Vs. Union of India and Others in WP (C) 17447of 2024, is declared Rule 96(10) of CGST Rules to be ultra wires section 16 of the IGST Act, deeming it manifestly arbitrary. In this circumstances kindly requested to simplifying this procedure and given more impetus to the exporters in this segment.
GST Amnesty Scheme 2024
5. It was a welcome approach to provide amnesty scheme to the tax payers for the initial period of GST regime i.e up to financial year 2019-20. However further limitations are there in this scheme so that real relief to tax payers is very low. Delay in filing of returns for which admitted tax, its interest, penalty for which there is no relief. In short for all the cases of admitted tax there is no relief under this amnesty scheme. Similarly, section 73 notices involving demand only will be eligible under this scheme. It is kindly requested to include notice, demand under section 74 also during the above initial period of GST for amnesty scheme. Otherwise, tax payers to suffer normal tax, interest and again penalty which would be 100% of the tax component. Moreover, the above scheme declared which shall expire on 31st March 2025, even though it is declared that the scheme is effective from 1st November 2024. Till this period the required forms are not available in the GST portal. Therefore, kindly re-consider the period of Amnesty Scheme up to September, 2025 and demand u/s 74 also may be included accordingly.
Author Bio
Sir, Kindly propose two more changes:
1. Removal of root cause of GST FRAUD i.e. Input Tax Credit provision as it is resulting in massive fraud
2. Exemption to members of Coop. Housing Societies & RWAs from 18% GST on member’s monthly contribution towards common expenses.