News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
« Service Tax »
 What is digital tax and why is India under investigation?
 Service Tax can’t levied If No Services are provided to Distributors and No Payment is made: CESTAT
 Tax relief likely on creation of ‘permanent establishment’
  Here're 5 key changes that come into effect from June 1 From income tax to trains
 Odisha government exempts taxation for three months tax on contract carriages
 New rules seek to make tax return processing, assessments more effective
 How can your parents, spouse, children help in saving taxes?
 Punjab extends deadline for paying property tax till June 30
 ITC can be availed on Detachable Sliding and Stackable Glass
 Give us tax certificates instead of tax refunds if money is a problem: Companies tell government
  Making the smart choice Old tax regime or new regime

70% of all goods and some consumer durables to become cheaper under proposed GST regime
April, 11th 2017

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment. Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council will take a final call at its next meeting on May 18-19. GST, India’s biggest tax reform in decades, is expected to be rolled out on July 1.

The government is keen to avoid price shocks following the switchover to GST and the fitment exercise will be guided by this principle. The GST legislation contains an anti-profiteering clause to ensure that industry passes on tax benefits to consumers by lowering prices where applicable.

GST seeks to replace central taxes including central excise, service tax and cesses along with state taxes including value-added tax, purchase tax and entertainment tax by a single levy, thus creating a unified national market. Moreover, industry will be eligible for seamless input tax credit that should also drive down prices as tax embedding through imposition of tax on tax inflates the final price of a product.

By slashing costs and boosting efficiency, GST will result in GDP growth getting a 1-2 percentage point lift, according to experts.

Final fitment should be based on effective tax rate to lower tax burden on consumers, they said.

"In most consumer products, excise duty is applied on MRP (maximum retail price) less abatement of 30-35%," said Pratik Jain, leader, indirect tax, PwC. "So, if MRP is 100, effective excise duty works out to 8-9%. When you add a standard VAT of around 13%, the effective rate works out to 21-22%. One would hope that most of these products, which include most FMCG (fast-moving consumer goods) and consumer durables, would be subjected to 18% GST and not 28%. If not, it would increase the tax burden on consumers and intended benefits of GST in terms of lower prices and increased manufacturing would be difficult to realise."

Home | About Us | Terms and Conditions | Contact Us
Copyright 2020 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting