GST Council has announced Goods and Service Tax (GST) rate, but it also requires some modifications in the upcoming days. Several industries and businesses which include FMCG, Automobiles and traders had been requesting to the Central Government for revising taxation rates. The next meeting of the GST Council will be scheduled on 3rd June 2017.
Revenue Secretary Hasmukh Adhia said, “We understand the food processing industry needs to be encouraged”. He debated that if the food items were placed in the zero percent or exempted category, the food processing industry will be in loss. He added that the GST Council Meeting will take an outlook on the definition of branding.
He also added that “There have been some concerns raised in the financial service sector that loans and all of these will become costlier, no way (it is going to be so).”
“All people in financial services will know, we are not charging service taxes in deposits as well as loans, but taxes on other services. Loans are not going to become costlier. That is a misplaced fear, because of lack of understanding,”
On concerns by representatives of food processing sector, Adhia said a decision on the rates of food-grains, especially wheat and rice, would be taken at the June 3 meeting.
Vanaja Sarna, Chairperson of the Central Board of Excise and Customs said that GST Council can revise the taxation rates if there is any justification for reconsideration. Adhia also said that GST might force India’s GDP to go up by more than 4 percent just because of the simplicity and predictability of the new indirect taxation structure and encourage more people to follow the government rules.
Q Which states will be benefited with the implementation of GST?
West Bengal, Punjab, Uttar Pradesh, Rajasthan, Bihar and Madhya Pradesh are speculated to be benefited with the implementation of GST Regime as it is expected that above states will enhance growth in tax revenue.
Q If the tax rate is same for everyone then how will these states earn profits?
The current taxation structure system is production based. Goods which are produced or manufactured in particular state will benefit with taxation. After the implementation of GST, the goods sold in these state will cover the taxes like 18% tax on any goods meets the 9% as SGST and the rest 9% as CGST.
Q Will GST affect some states?
Yes. Maharashtra, Tamil Nadu, Gujarat, and Haryana will be affected as a manufacturing state. However, the central government will compensate for the loss of up to 5 years.
Q How will compensate states?
GST impose a cess on luxury items, aerated drinks, etc. Cess money will be having a different fund structure. It is expected that through cess the country will earn revenue which is estimated at 55,000 million in the introduction year of GST.
