GST and its roll out blues: Modi’s ‘biggest achievement’ has a few snarls
Applauded by ASSOCHAM so successful Modi government so far, the tax on goods and services (GST) scheduled for the July 1 deployment has expressed concern of various sectors, including India inc.
Concerns vary the rate of tax to be taken from various industries to the structure of the new regime. The clamor grew after the GST Council meeting on May 18 and 19 in Srinagar, where tariffs for 1211 articles and 500 services were decided.
The GST has proposed a multiple type structure. Almost all goods and services are classified into groups that attract GST rates of 5, 12, 18 and 28 percent, respectively. In addition, four (ie, luxury cars, non-alcoholic beverages, tobacco and related products “paan”) attract each separately assigned.
Limit your expectations
According to a recent research note from Nomura, the benefits of the GST in its current form will be “far less than originally anticipated.”
As previously reported, the research note attributes to the complex structure of the regime and the multiple tax rates.
“The proposed GST is quite complex with multiple tax rates (between different classes and even the same category) to minimize the impact of inflation and due to political considerations,” the research note said.
The note added that the efficiency gains to be derived from a simplified tax structure would be reduced due to the current structure of the scheme. However, in the note, Nomura expressed hope that in the coming years, the government would be “able to move towards a more ideal GST.”
Several slabs of taxes and fees that cause concern
During the past week, the Business Standard reported that a group of industries had taken steps before the government for a GST exam fee. These include toys, multiplexes, Ayurvedic products, paints, detergents, non-alcoholic beverages and hotels.
Toys, multiplexes, paints, detergents and soft drinks were slapped with a 28 percent GST. In addition, Ayurvedic products have been grouped under the slab of 12 percent, a movement that attracted critical guru Ramdev yoga, Patanjali Ayurved who took the consumer products market by storm.
However, the government remained firm in its response. As reported, at the end of last week, Vanaja Sarna, chair of the Central Board of Taxes and Customs, dismissed a GST examination fee, with the exception of a few cases.
Big companies are not the only ones concerned. As noted above, the country’s traders seem to be concerned about sorting the different items under various GST tax shelves. According to the Confederation of All India Traders (CAIT), this created an atmosphere of anxiety and concern in the business community.
Given the growing dissatisfaction with the proposed GST rate, the CAIT has urged the government to revise the timetable.
“The broader impact of the classification of articles on various tax slabs should be carefully assessed, since under GST, not only the tax paid on the goods, but even the taxes paid for the services will be eligible for the credit Taxes for inputs, “said CAIT, adding that since the input tax credit is already available in the tax paid between companies in the purchase of goods and the use of services, benefits must be defined before to estimate The impact on product prices.