GST Glitches Only To Be Ex­pected

The point is to iden­tify and re­solve them

The Economic Times - - The Edit Page -

The GST Coun­cil has done well to re­vise rates on19 ser­vices that in­clude job work rate on tex­tiles and also clear rules for e-way bill to re­move bor­der check­posts. Con­fu­sion over tax rates on goods was not un­ex­pected, given that there are over 50,000 prod­ucts that have come un­der the new levy. But am­bi­gu­ity leads to clas­si­fi­ca­tion dis­putes and pro­vides the scope for buy­ing favourable ad­min­is­tra­tive dis­cre­tion. That’s wholly avoid­able. The rem­edy is to have a clut­ter-free GST. Goods and ser­vices have been clas­si­fied as per the har­monised sys­tem of nomen­cla­ture, a glob­ally stan­dard­ised sys­tem of names and num­bers. This is wel­come as iden­ti­fi­ca­tion of goods be­comes easy through spe­cific HSN codes, and also en­ables ex­porters to claim re­funds on the tax paid on in­puts used to make the fi­nal prod­uct. It would raise busi­ness ef­fi­ciency if all prod­ucts with the same four-digit HSN code were to have the same rate of GST. Kota stone, for ex­am­ple, at­tracts the low­est 5% GST, com­pared to mar­ble that at­tracts the high­est rate. But kota stone mak­ers want clar­ity on the clas­si­fi­ca­tion to en­sure that rev­enue au­thor­i­ties do not come call­ing on them. Re­cently, the gov­ern­ment clar­i­fied that sa­rees, de­signer or em­broi­dered, will be treated as fab­ric and not gar­ment, and hence at­tract the low­est GST of 5%. Dif­fer­en­tial tax rates on the same kind of prod­uct should go. The pricier prod­ucts con­sumed by the well-off, will bear a higher tax bur­den, even if the rate of tax is the same as on a cheap al­ter­na­tive. A clean GST will ease ad­min­is­tra­tive com­pli­ance. It would be use­ful to start an on­line fo­rum for in­dus­try, es­pe­cially small and medium en­ter­prises, to raise their griev­ances, throw them open for pub­lic dis­cus­sion, lead­ing to res­o­lu­tion.

The rates for most prod­ucts will go down now that ex­cise du­ties and value-added tax have been sub­sumed in GST. Man­u­fac­tur­ers and re­tail­ers must en­sure that they stamp new prices on their pre-GST stock, in­stead of levy­ing GST on top of the old max­i­mum re­tail price. Surely, there is scope to con­verge GST rates once the tax base widens.

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