Government will have to be proactive to ensure a smooth roll out of single impost
After having gone through anxiety pangs, the mood has suddenly changed to one of exuberance and bonhomie in most retail markets as the country gets ready to ring in the single impost, goods and services tax (GST) in two weeks.
Though, unresolved issues continue to bog about half a dozen sectors, the retail markets seem to have seized the moment with big time discounts, schemes and offers to minimise the stocks on the cut off day, June 30. E-commerce players have also joined the retail outlets and chains by putting on offer a zillion products with heavy discounts and cash back offers.
From TVs, washing machines, refrigerators, air conditioners to a host of white goods, the buying spree seems to have set in with consumers wanting to cash in on the ‘clearance sale’ happening all across. Even automobiles and motorcycles manufacturers seem to have joined the sales bandwagon offering even tax refunds in case the incidence was lower after the rollout of GST.
While consumers have also warmed up to the bargain basement sales happening across the country, the pre-GST days in India look distinctly different from what has been reported in countries like Brazil. In over a dozen countries the pre-GST days were most painful with several brands and companies profiteering big time, making the transition to a single impost most difficult for consumers.
Back home, sales and stock clearance pushed aggressively by companies, dealers and retail outlets have been triggered by apprehensions of tedious and time consuming procedures in claiming tax credits on pre-GST stocks. Huge increase in input tax credit up to 60 per cent of total stock held before July 1 from an earlier proposal of 40 per cent has particularly not enthused the industry. GST council’s decision to even lower tax incidence on most of the 66 daily use items to 12 per cent from an earlier 18 per cent has not helped the industry cause.
Even now, several shortcomings in bracketing different products continue to be pointed out by industry that’s crying foul on GST council’s decisions. For instance, while end-use fertilisers attracted 12 per cent impost, their inputs like ammonia, phosphoric acid or potassium have been bracketed in 18 per cent. Sports equipment producers have been cut up with GST Council’s decision to levy 12 per cent on sports equipment while applying differential rates by putting physical exercising equipment on 28 per cent. While several agricultural commodities have been put at zero-rate, same products packaged would attract 5 per cent levy. The list is exhaustive and inconsistencies too many.
The council at its last meeting on June 25 before GST rollout may have to apply itself to several of these issues arising out of wrongfully bracketing products and services. But, the big picture cannot be missed out by the GST council headed finance minister Arun Jaitley i.e. to ensure smooth roll out of single impost, considered globally as the biggest tax reform in the history of independent India.
Though mood in the industry has been sombre, the government cannot sit back and must work proactively to prevent profiteers from making hay. Specialised teams may have to track every single product and service to keep the profiteers at bay. Apart from constant vigil, impregnability of GST network will be key to ensure there’s no hanky panky in either claiming tax credits, passing on these credits or taxing the consumers unjustifiably. Tax sleuths training on GST will also be put to test in first few weeks itself. Centre and states coordination or lack of it would come into public glare.
Prime Minister Narendra Modi’s appeal to undertake a massive outreach campaign on GST assumes significance in this backdrop. Elected legislators and Parliament members can also play their positive part in keeping up the tempo.