Free Press Journal

GST slab fixation: Hope to reduce price hike burden

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Experts and common people express views on declaration of GST slab fixation

Indore: With the fixation of slab of rates for Goods and Service Tax (GST), which will come into existence from April 1 2017, tax experts and common people have expressed hope that the initiative would help in reducing price hike. Some have expressed fear that they would have nothing in hand due to rise of rate of service tax.

Fixation of slabs for GST has created fear among people. They are busy in finding out their interest from the initiatives. As per announcement, zero rates is fixed for grains, prominently consumer price index items while 5% is fixed for items for mass consumption.


Two standard rates (12%) and (18%) have been fixed for items like soap, cosmetics oil, shaving blades. Similarly, white goods such as TV, refrigerator, washing machine, non- luxury cars would invite 28% tax. (These goods at present get tax of 27 per cent (12.5+vat@14.5%.)

People have said the rate of tax has been fixed in a manner that it will certainly reduce the burden on tax on essential commodities resulting in reduction in inflation.

The rate of GST has been fixed @5% on most of the commodities on which the states are currently levying VAT @ 5%.

It will certainly reduce State’s Collection of tax on these commodities because they have to share the revenue with Centre (SGST 2.5+ CGST 2.5) but it will be compensating from the revenue share on services.

The rate of GST on daily goods has also been fixed at a lower side which will also reduce burden of tax on consumers.

 However, demerit goods will be costlier due to imposition cess in addition of higher rate of 28%. Yogesh Mehta, secretary Association of Industries of Madhya Pradesh demanded that rates on raw materials used in MSME units should be kept at lower slab at 12%.

WHAT THEY SAY

Slab of GST rates will definitely help in reducing price hike after the new tax regime coming into force. The items that could fuel price hike are being kept in 0 tax category. Similarly, common consumer goods are being placed in slab 5%. However, hike in service tax won’t affect common people much.- RS Goyal, exponent of GST.

Different slabs, one system. There will be classification disputes from the Day One. It seems history is being repeated again. Cess is there, different rates for gold. The model GST law is 75% borrowed one and the basic definition of supply is ambiguous.- CA Navin Khandelwal Service Tax Practitioners

While it can be appreciated that considering ground realities of Indian public’s consumption patterns, multiple rates is a compulsion.  It will be possible to respond fully only after we know what goes in different schedules. But it is difficult to reconcile to the idea of imposing Cess. This is totally against the very founding principles of GST.- Sushil Sureka former member, MP  VAT draft Committee

It is totally confusing. Good part is rates of essential commodities are being kept at lowest level but the rate of service tax would be increased from 3% to 18%. This will help in price hike. In the end, there would be nothing in hand.- Deepak Sharma, professional

Fixation of four slabs and imposition of cess are against the sentiment of ‘one tax-one nation’. Similarly, rise in service tax would have negative repercussions on common men. This hike would increase price of goods and common people would be burdened.- OP Dhoot, Industrialist