On July 1st 2018, it will be a year since GST was launched across India. Goods and Services Tax popularly called GST is a single indirect tax for the whole of the Nation. GST reduces the cascading effect of taxes or tax on tax.
A year on, as we analyze the performance of GST, let’s take a look at some of the changes that may be brought into GST in the coming months.
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Goods and Services in India are currently slotted into 5 slabs. These are 0%, 5%, 12%, 18% and the 28% slab. Critics of GST feel that 5 different rates are a bit too much. Perhaps the number of slabs under GST should be reduced.
Rashesh Shah the President of FICCI, had a candid chat with Zee Business. He was of the opinion that the 28% GST Slab must be abolished. Shah feels the maximum GST rate should be brought down to 18%. If this is difficult, the maximum GST should be brought down between 20-22%. Yes, the Government has brought down many items which were in the 28% GST Slab, but some items left lying in the bracket are very heavy. These items should be brought down to 20-22% and eventually 18%. FICCI has made suggestions to the Government that from the current 5 GST Slabs, the number of slabs could be reduced to 3 slabs and then eventually to 2 Slabs.
This is what Adi Godrej an Indian Billionaire Industrial and Businessman, the head of the Godrej family and the chairman of the Godrej Group, has to say on GST. Godrej recommends that the Government should transfer all goods, except high-end luxury goods and Sin goods from the 28% GST Slab to the 18% GST Slab. This would help the consumer. Adi Godrej also recommends that Petroleum Products be brought under GST. He is also fine with the current structure and doesn’t believe that moving from a 4 Slab structure to a 2 Slab structure is a good idea.
See Also: GST And Its Calculations
The Government may reduce rates on construction material to boost the construction sector which is currently facing a slowdown. Cement and Paint are in the top 28% GST Slab. This makes them quite expensive.
The Government plans to bring down a number of items which are in the 28% GST Slab to a lower slab, because even though these items are heavily taxed, they don’t fetch much revenue to the Government which defeats the purpose of a high tax.
Cement and Paint could fall under a lower GST Slab, giving the construction industry, the much desired boost it seeks.
See also: GST advantages and disadvantages
Many citizens believe that if Petrol and Diesel can be brought under GST, prices would go down. This is what the Bihar Deputy CM Sushil Kumar has to say on petrol and diesel being brought under GST.
If Petrol and Diesel come under GST, they would fall under the 28% GST Slab. The States would then be allowed to levy/charge taxes on top of the 28% GST, to prop up revenue. Putting Petrol and Diesel under GST would take time as different States had different views.
If petroleum products are brought under GST, there would be a minor impact on taxes and prices. The prices of Petrol and Diesel would continue to be driven by global prices. States currently get 45-50% of their revenues from Petrol and Diesel. Petrol and Diesel would not come under GST immediately, but the focus would be on the new tax filing system.
If Petrol and Diesel are brought under GST, the oil industry would get the benefit of input tax credit. This industry is losing revenue, as they were not able to offset GST Tax paid on inputs, against those paid on the sale of products like petrol and diesel.
See Also: GST Tax Rates In India
The Rs 33,000 Crore flexi staffing industry has benefited big-time from GST. This is because of the input tax credit, where at the time of paying tax on output, you get to reduce the tax paid on inputs. This has boosted jobs and economic growth in India.
The flexi staffing industry is also called the temporary hiring sector. The Telecom sector, FMCG, IT/ITES, Hospitality, Manufacturing, Banking, Insurance and the Financial Services sector employs a lot of temporary staff. Outsourcing in these sectors will increase, boosting jobs in India.
GST was a boost to 2 sectors. BFSI, Telecom, FMCG and the hospitality industry increased outsourcing to benefit from input tax credit. Business providers who supply this talent also benefited improving job opportunities in India.
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