Page 11 - Banking Finance January 2020

GST UPDATE

Govt committee recom- Govt. likely to restructure GST on mobiles, footwear,

mends 2 GST slabs in- fertiliser
stead of 5 The government is planning to rework the GST structure for some products,
ranging from footwear and fertiliser to mobile
The government may consider col-
lapsing phones and medical equipment and tractors and tex-
the five tiles. The levy on the final product of these products
is lower than the inputs and raw material. This re-
GST slabs
sults in a situation where the government has to an-
into two
and ad- nually refund taxes of around Rs 20,000 crore, while
dress in- industry has to queue up to get the money back.
verted duty structure distortions in “It creates unnecessary litigation and distortions,” said an official, pointing out
order to simplify the system and com- that manufactured goods in the lower rate slabs of 5% and 12% suffer from
bat a shortfall in collections. As per what is called inverted duty structure. To tackle this, the government can ei-
sources, a committee of officials from ther raise the GST on the finished product or lower levy on inputs and raw ma-
the Centre and the states on GST rev- terial. But lowering of rate may not be possible in case of items in the 5% slab.
enue augmentation recommends A presentation shared with the states has listed close to two dozen items, in-
these measures. According to the cluding LED lights, renewable equipment, tractors, generators and inverters,
presentation, there could be a short- agarbatti, agriculture machinery, bicycles, utensils and water pumps. In sev-
fall of Rs 63,200 crore in GST collec- eral cases, the inverted duty structure is the result of tinkering with the rates
tions in the current financial year and over the last two-and-a-half years.
as much as Rs 2 lakh crore by 2021. A panel of officers looking at reworking GST flagged the issue in a presentation
The panel suggested two slabs of for the GST Council and pointed out that tax liability on certain finished prod-
10% and 20%. Alternatively, some ucts remain lower than what is paid on raw materials and services and compa-
goods could be moved from the 18% nies claim refund of the extra taxes paid. A decision could not be taken as the
slab back to 28%, the panel said in a ministers wanted a more in-depth analysis of the issues that were raised.
presentation to Bihar deputy CM
Sushil Modi in Bengaluru. The GST Grievance redressal mechanism for taxpayers soon:
Council had, at its recent meeting, GST Council
asked Modi to look into revenue aug- The GST Council will set up a grievance redressal mechanism for taxpayers. The
mentation measures. Modi, Bihar fi- decision was taken at the 38th meeting of the GST Coun-
nance minister and head of the group cil. It has decided that a structured grievance redressal
of ministers (GoM) on integrated GST mechanism should be established for the taxpayers un-
(IGST), had ruled out the possibility of
der GST to tackle grievances on GST-related issues of
changes to the rate structure at a
specific and general nature, an official statement said.
time when revenues have moderated
The council will set up the Grievance Redressal Committee (GRC) at zonal and
due to the economic slowdown.
state levels consisting of central tax and state tax officers, representatives of trade
“I want to assure you that not a and industry and other goods and services tax (GST) stakeholders.
single state... (or) the Union govern- The committee will be constituted for a period of 2 years and the term of each
ment are ready to raise tax rates,” member will be for likewise, said the statement. "For time-bound handling of
Modi had said. The panel highlighted grievances and accountability, GSTN shall develop a portal for recording all such
the issue with 23 items besides some grievances (including their scanned images) and their disposal. "It shall be the
miscellaneous ones to drive home
responsibility of the co-chairs of the grievance redressal committees to ensure
the point about the need to correct
timely entry of the grievances and updating the status of their disposal on the
inverted duty structure distortions portal," the statement said. The details of action taken on all issues will be dis-
that mean inputs are taxed at a played on the portal, which shall be available for viewing to all stakeholders to
higher rate than finished products.
check the status of the resolution, it added.

BANKING FINANCE | JANUARY | 2020 | 11