In the run-up to the crucial GST Council meet on June 3, India Inc’s chorus seeking a government re-look at the GST rates fitment is rising.

Industry bodies and trade associations have gone into a tizzy shooting off representations and petitions to get the government to hear them out before the roll-out from July .

The clamour for a review of rates is spread across products, including shampoos, kajal, agarbattis, ayurvedic products, dry fruits, blended oils, school bags, children activity books and even some furniture items, among others.

Traditional items

Take, for instance, the personal care segment. With most products being put under the highest tax slab of 28 per cent, barring hair oils, toothpaste and soaps, FMCG companies are making a case for a lower tax rate for products such as shampoos and hair dyes, stating that these products are also used by the common man. Dinesh Dayal, President, Indian Beauty & Hygiene Association, said: “The current cascading rate of duty on personal care items works out to be around 22 per cent; so, under the GST regime, the tax incidence on these products will become significantly higher. A product like shampoo has 92 per cent rural penetration, while nearly 50 per cent of the sales volumes for hair dyes come from rural markets.”

The association has also pointed out that kajal , which is currently grouped along with other traditional items, such as bindi and s indoor, has been inadvertently left out of the new GST rate structure. They have urged the government to re-insert k ajal in this grouping of traditional items that will attract nil duty.

Similarly, associations of Indian importers and traders believe that the proposed 12 per cent GST rate on dry fruits and nuts will make them unaffordable, and have petitioned the government that these be put in the 5 per cent GST slab in line with the current value-added tax structure. Dealers of consumer products, too, are hoping to get clarity on input credit available on transition stocks in the upcoming meeting of the GST Council. Consumer products companies are pushing for higher input credit on these stocks to avoid sales disruptions.

Besides asking the government to reconsider the rate of cess on aerated beverages, the Indian Beverage Association has also sought lower tax rate on non-sugar sweetened drinks and aerated beverages that contain fruit juice. Multiplexes and amusement park industries, too, are disappointed at being put under the highest tax slab along with casinos and gambling.

Review unlikely

Bimal Jain, Chairman, Indirect Tax Committee, PHDCCI, said: “Certain product categories are facing classification issues as they have been classified in 7-8 different categories under various tax slabs. In some other sectors, the indirect tax incidence has gone up significantly so they are hoping that the government will re-look the GST rates.”

The Finance Ministry has already indicated that a review of rates is unlikely and companies should work out their product pricing to ensure that the benefit of input tax credit is passed on to consumers. It has argued that though the headline rate under GST of taxing some items may be higher, the effective rate will be much lower.

“A review of rates can only happen at the highest political level or if a group of States call for it collectively,” said a source.

HSN-based classification

Officials said the GST Council in its June 3 meeting will focus on fixing the rates of only a handful of items, including gold, agricultural implements, bidis and cigarettes, textiles and footwear and packaged food items. Revenue Secretary Hasmukh Adhia also clarified some questions on Twitter.

“The effective tax rate under GST is higher than the existing rate for some items primarily because of the harmonised system nomenclature (HSN) based classification and differing rates of VAT in States,” said an analyst, adding that in some cases, the government seems to have taken the highest VAT rate rather than a weighted average of the VAT rate for finalising the GST levy.

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