Industry pitches for 18% GST; will you pass it on? asks govt

NEW DELHI: At the first meeting of the empowered committee of state finance ministers after Parliament’s passage of the GST Bill, the panel asked business chambers,

NEW DELHI: At the first meeting of the empowered committee of state finance ministers after Parliament’s passage of the GST Bill, the panel asked business chambers, traders and industry representatives to pass on lower rates, if implemented, to consumers.

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During the meeting, representatives pitched for a GST rate of 18%, saying it would generate adequate tax buoyancy without fuelling inflation and also demanded relaxation in the penal provisions.

“It should not happen that we lower the tax rates and the benefits are not passed on to the consumers,” said Amit Mitra chairman, empowered committee and West Bengal finance minister.

Apart from lower rates, industry chambers also said that it would be difficult for them to meet the April 1, 2017, deadline for roll out of GST as they need sufficient time to put in the technology infrastructure in place.

“The centre has agreed for full 5-year compensation for revenue loss to states, so 18% rate will be more than adequate,” CII president Naushad Forbes said.

Industry chamber Ficci too added that the “standard rate” should be reasonable and be such that it checks inflation, and tendency to evasion and ensures compliance. “Goods fully exempted from the levy of excise duty and VAT by all the states should be categorised as exempted goods in the GST regime as well,” it said in a statement.

Critical of keeping the rates low, Thomas Isaac, Kerala finance minister said: “The incidence of tax rates will come down from 30% ...Industry should proportionately reduce the maximum retail price (MRP)”.

Assocham on its part demanded relaxation from the penal and prosecution provisions during the first two years after GST is implemented, except in case of tax fraud or non-deposit of collected taxes. Traders body CAIT, IT lobby NASSCOM and e-commerce players too have made representations to the empowered committee.

The empowered committee also called for an independent audit of expenditures undertaken by GST Network. “A major concern is that GSTN’s accountability, deliverables should be clear to the states and to GSTN. Its financial model was decided today and there was consensus that both Centre and states should contribute,” Mitra said.