1. GST to aid aam aadmi, result in decreased cost for most supplies

GST to aid aam aadmi, result in decreased cost for most supplies

In less than no time, India is expected to orchestrate fiscal harmony in a federal polity; by introduction of Goods & Service Tax (GST).

By: | Published: June 16, 2017 4:46 AM
To assure cultivation of a commoner’s belief of GST begetting softening of prices, the GST Council has basis the various representations received by it, revisited the approved rates of GST for certain products inter-alia including essential goods.

In less than no time, India is expected to orchestrate fiscal harmony in a federal polity; by introduction of Goods & Service Tax (GST). Aligned to the present government’s outlook of a no-zero hour policy, July 1 appears to be the date of untying the knot on India’s biggest tax reform.

Allied to the traits of a mature political leadership, the government has, regardless of the various steeplechases, aimed at seeking public buy-in for most decisions made by it. To recap, the GST Council had in its meeting on May 18-19, approved the GST rate fitment structure for most goods and services. To assure cultivation of a commoner’s belief of GST begetting softening of prices, the GST Council has basis the various representations received by it, revisited the approved rates of GST for certain products inter-alia including essential goods.

Aligned to the current weighted average taxation of certain products, the GST Council has approved reduction in rates for healthy foods like cashew nuts and raisins, from the earlier proposed 12% to 5%. Similarly, aligned to the government’s objective of Sarva Shiksha Abhiyan with financial factors not being a deterrent to access of education to all, rates for exercise books, note books, children’s picture, drawing or colouring books, job work for printing of books have also been reduced from the earlier approved rates.

Also, to offset additional pricking of pocket of a common man, the GST Council has approved reduction of rates for spectacles and glasses for the said purpose. Similarly, to venerate the religious sentiments with financial factors not being an off-put, the GST Council has approved lower/ NIL rate for agarbatti and kajal, respectively. Further, to attend to the increasing incidence of diabetes in the 21st century, the GST Council has approved a lower rate for insulin; assuring taxes not being an impediment to its access by a common man.

To further meet the prognostications of reduced costs, increased efficiencies and reduced hassles for various industries including manufacturing, which have a direct/indirect impact on the primary sectors, the GST Council revisited the rates for various products; for instance, tractor production. The GST rates proposed by the Council in its earlier meeting culminated into an inverted duty structure being moulded for the tractor manufacturing sector—given the rate of the earlier approved GST for tractors being at 12% vis-à-vis the parts being taxable at 28%. While the GST law contemplates provisions for refund of taxes in case of inverted duty structure, the same could lead to unwarranted blockage of working capital and related issues. To address this, the GST Council in its meeting on June 11 has approved a lower rate of 18% for some parts of the tractor, conveying some relief to the sector and related end consumers, ie, farmers.

Also Watch:

On a separate note, addressing the various apprehensions of the industry as a whole including the common man with regard to price augment of electricity charges, the GST Council has approved reduction in rates for various goods used by the power sector like static converters, co-axial cables, winding wires, etc. The apprehension essentially being the approval of a higher rate of GST for procurements by the power sector and related inability of the sector to recoup the credits on account of exemption for generation and transmission of electricity. Nonetheless, panels, boards, fuses, etc, which constitute a significant spend for the sector have been retained at the higher rate of 28%.

Also, approval of increased threshold for composition levy from the earlier proposed `50 lakh to `75 lakh by the GST Council is a welcome move for the SME sector as a whole —essentially on account of the option being available to an increased population. Besides the above, the GST Council has also approved the accounts and records rules with the requirement of maintaining separate accounts for manufacturing, trading, services, etc, being dispensed with.

While the GST Council has accepted the industry representations for 66 products, the rates for some essential products/ services like cement, telecom services, etc, have not been revised. Nonetheless, with enabling of anti-profiteering and other corrective measures, GST should result in a decreased cost for most of such supplies as well.

It is expected that the Council in its next meeting scheduled on June 18 would finalise the anti-profiteering and e-way bill rules—both being a critical mast to the GST foundation. Also, as any new law entails various changes to gear up—one of the critical aspects being transition from the old law to the new one, the industry expects the Council to approve/the Government to clarify fate of various benefits/exemptions/schemes accorded under the current regime like funded projects for power, deemed exports, area-based exemptions, etc.

Nonetheless, with the continual commitment coupled with efficacious and targeted results of the GST Council meetings held so far, it is expected that most of the above issues, including various other issues not highlighted above would be clarified with appropriate clarities being issued on the same.

  1. No Comments.

Go to Top