132 days af­ter roll­out, GST cut on over 210 items – 180 of them in top 28% slab

States Peg To­tal Loss At 20,000Cr, Cen­tre Says It’s Mostly No­tional

The Times of India (New Delhi edition) - - FRONT PAGE - Sid­hartha & Pra­bin Kalita

Guwa­hati: Mak­ing the big­gest change in the four­month-old goods and ser­vices tax regime, the GST Coun­cil on Fri­day moved 80% of items in the top 28% tax bracket to lower rates. Start­ing Novem­ber 15, eat­ing out could cost 5-6% less than be­fore and a whole host of con­sumer prod­ucts, like sham­poo, de­odor­ant, choco­lates, fans, fur­ni­ture and san­i­tary fit­tings, should get cheaper by up to 10% or more. acket. That’s a re­duc­tion of 80% in the num­ber of items in just 132 days.

The to­tal tax on sev­eral prod­ucts still in the high­est slab will be higher than 28% since they also at­tract a cess.

The gov­ern­ment also re­duced the levy un­der com­po­si­tion scheme for traders and in­dus­try to 1% of turnover, with fur­ther eas­ing for those sell­ing ex­empted goods.

Fi­nance min­is­ter Arun Jait­ley said the rate ad­just­ment was part of the ra­tio­nal­i­sa­tion ex­er­cise un­der­taken over the last few months. “Op­ti­cally, some of them should not have been there (in 28% slab). There are some items in which small play­ers were ex­empted from ex­cise (duty pay­ment be­fore GST was rolled out),” he told re­porters af­ter a seven-hour meet­ing of the panel that has rep­re­sen­ta­tion from all states and two Union Ter­ri­to­ries. A lower tax rate is ex­pected to trans­late into a re­duc­tion in prices of over 200 prod­ucts.

The coun­cil went be­yond the rec­om­men­da­tions of the fit­ment com­mit­tee com­pris­ing of­fi­cers. The com­mit­tee had sug­gested keep­ing 62 items in the high­est bracket. The min­is­ters, how­ever, ig­nored de­mands for duty re­duc­tion from the con­struc­tion sec­tor and left ce­ment and paints in the 28% slab. Panic-stricken govt has no op­tion but to con­cede de­mands for change. Thanks to Gu­jarat elec­tions, gov­ern­ment forced to heed ad­vice of op­po­si­tion and ex­perts on flaws in im­ple­men­ta­tion of GST

The lat­est round of changes will leave a Rs 20,000-crore hole in the pock­ets of the states and the Cen­tre. It is the Union gov­ern­ment that will have to bear the bur­den of any short­fall in col­lec­tions since it has com­mit­ted to make good any rev­enue loss for five years. Jait­ley, how­ever, said the rev­enue loss was no­tional.

“Rate re­duc­tion for 200plus goods and ser­vices may sug­gest that there is buoy­ancy in tax col­lec­tions,” said Divyesh Lap­si­wala, tax part­ner at consulting firm EY In­dia,

— P CHIDAMBARAM

FULL COV­ER­AGE: P 20 & 27

sug­gest­ing that the rev­enue loss will be com­pen­sated.

More than the rev­enue con­sid­er­a­tions, the move is aimed at cheer­ing con­sumers and pla­cat­ing traders and small busi­nesses who have been com­plain­ing of higher com­pli­ance bur­den. With con­sumers on its side, the Cen­tre is hop­ing that the protests from traders will wane. The rate cuts should re­duce leak­ages as there is lower in­cen­tive to evade taxes.

As­sam fi­nance min­is­ter Hi­manta Biswa Sarma, who headed the group of min­is­ters for re­view­ing the tax struc­ture for restau­rants, said on Fri­day, “To­day we have ad­dressed ev­ery small is­sue raised by in­dus­try, traders and con­sumers.”

In May, when rates were fi­nalised by the GST Coun­cil, the Cen­tre and the states had agreed to re­work rates to en­sure that they would be close to the com­bined in­ci­dence of Union ex­cise duty and state value added tax. That prin­ci­ple has been given a go-by, at least in the high­est bracket.

New rates come into ef­fect from

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