GST impact: No tax-free goods for serving, former employees at UP govt-run stores | india-news | Hindustan Times
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GST impact: No tax-free goods for serving, former employees at UP govt-run stores

The GST law has done away with the provision that enabled state governments to allow its depots sell goods to its employees and pensioners below the market rate

india Updated: Jul 03, 2017 12:38 IST
Brajendra K Parashar
UP State Employees Confederation president Satish Kumar Pandey said the GST has created a crisis for employees and pensioners.
UP State Employees Confederation president Satish Kumar Pandey said the GST has created a crisis for employees and pensioners.(HT File Photo)

Around 22 lakh employees and pensioners of the Uttar Pradesh government will no longer be able to buy tax-free consumables and goods from state-run stores and canteens at lesser than market rates once the pre-goods and service tax (GST) stocks are exhausted.

The GST law has done away with the provision that enabled state governments to allow its depots sell goods to its employees and pensioners below the market rate by exempting them from the VAT that was up to 14% or even more in the case of commodities that also carried 0.5-1% special additional tax (SAT).

“After the GST, the state government has lost its power to allow any such tax exemptions to its employees,” a senior official who did not wish to be identified told the Hindustan Times.

He said Indian Army personnel have, however, been allowed 50% tax rebate on the goods they purchase from the army’s canteen store department (CSD) canteens, though before the GST they too enjoyed a 100% tax waiver.

The UP Employees’ Welfare Corporation, established in 1965 as a registered society, runs 160 depots across the state to make goods of daily use available to state government employees and pensioners and their dependents after their death at a rate below the market price.

These depots procured Value Added Tax-free goods from designated dealers and sold the same to the employees and pensioners for the same price without charging any VAT. Among the dozens of tax-free goods being sold by such stores included edible oil, atta, pulses, tea, ghee, spices, soaps, perfumes, toothpaste, fans, pressure cookers, watches, suitcases/briefcases, helmets and sanitary napkins.

In the case of army canteens, the state government exempted VAT only on the sale two wheelers and four wheelers with a total maximum limit of such vehicles that could be sold by all such canteens at 10,000 units every year.

“The UP government had to suffer an annual loss up to Rs 200-250 crore due to VAT exemptions given on goods sold through UP employees’ welfare corporation and the army canteen,” sources said.

“But this was a big relief to employees and pensioners to purchase goods at cheaper rates,” they said.

However, all such depots and canteens, sources said, would be free to exhaust the current stock at the pre-GST rates since they had procured the same from the designated dealers without the paying the VAT.

UP State Employees Confederation president Satish Kumar Pandey said the GST has created a crisis for employees and pensioners.

“We demand the central government to allow the state to continue to sell VAT-free goods to its employees through its stores and family bazaars,” he said.

He also demanded the continuation of the tax rebate on the existing stocks worth Rs 50 crore.

GST, India’s biggest tax reform that was launched on Saturday, will replace some 20 federal and state levies and unify a country of 1.3 billion people into one of the world’s biggest common markets.

Its supporters say the new tax will help lower tax burden, shore up revenues of the Centre and states and temper inflation in the long run, burnishing Prime Minister Narendra Modi’s credentials as a reformer before a planned re-election bid in 2019.