Soon, only 'sin and luxury' goods may dot 28% GST slab
The GST Council's decision to simplify and rationalise tax rate structure indicates that 28% rate bracket may be on its way out and it will be limited to ''sin and luxury "goods, according to tax experts and analysts.
The GST Council's decision to simplify and rationalise tax rate structure indicates that 28% rate bracket may be on its way out and it will be limited to ''sin and luxury" goods, according to tax experts and analysts. However, the companies need to ensure that the benefit of lower rate of taxes is passed on the consumer in alignment with the anti-profiteering clause, they said.
Pratik Jain, partner and leader (indirect tax), PwC, said the rate reduction is a good move from the policy standpoint. ''The industry need to be mindful of anti-profiteering provisions, given the government would expect the benefit of rate reduction being passed on to consumers. From a common man viewpoint, they may look forward to tying rakhi in a newly painted house, enjoying ice cream and watching movie on a smaller TV, with multiple fit options ranging from footwear on to consumers,'' he said.
R Muralidharan, senior director, Deloitte India, said the GST Council has reduced the rate of white goods to 18%, and with many items moved to 18% category, only 25-30 items will remain in the 28% category.
''This is a good step towards rationalisation of the GST rate slabs. Consumers will see a substantial price reduction with anti-profiteering provisions place, as the manufacturers and dealers are expected to pass on these benefits,'' he said.
Harpreet Singh, partner (indirect tax), KPMG India, said while the rate rationalisation would definitely bring cheer for the industry and consumers, it will be interesting to see how the government would try and compensate the revenue loss on account of tax rate reductions.
Motilal Oswal in its research report said over a period of time, the government may further consider pruning the list of items in the higher tax bracket.
''The reduction in rates is estimated to have an impact of Rs 6,000 crore to Rs 7,000 crore on government revenue. We believe that this shortfall will be partially offset by increased compliance and volume growth due to price elasticity of demand,'' it said.
This apart, the experts said the GST Council's decision on quarterly returns filing for assessees under a turnover up to Rs 5 crore will give a much-needed relief to nearly 93% taxpayers and pave the way for reducing compliance burden of the industry.
Abhishek Rastogi, partner, Khaitan & Co, said, ''Separate returns for composite dealers, B2B and B2C businesses will significantly encourage better tax compliance and help businesses focus on day to day operations.''
Singh said simplification of the return process not only meant easier compliance and less costs but also fewer tax disputes and litigations in the long run.
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QUESTION ON PRICE CUT
- The industry need to be mindful of anti-profiteering provisions, given the government would want the benefit passed on to consumers
- With many items moved to 18% category, only 25-30 items will remain in the 28% category
Source: DNA Money