Industry bodies have lauded the lowering of Goods and Services Tax (GST) rates and have said that the latest cuts bring comfort.
The Confederation of Indian Industry (CII) noted that the regular meetings of the GST Council are continuously framing a better and smoother working of the landmark Goods and Services Tax (GST).
“The continuous work being carried out to bring about convergence of GST to two to three rates, which is the most ‘transformative’ aspect of the tax reform, is especially noteworthy” said Chandrajit Banerjee, Director General, CII.
According to CII, the demand for consumer durables such as 32-inch televisions, digital cameras and video cameras will rise due to the tax reduction from 28 per cent to 18 per cent. The index of industrial production for consumer durables has led the growth of the manufacturing sector this year, recording 9.4 per cent for April-October 2018, it says. The reduction of tax in items relating to pulleys, transmission shafts, cranks and gear boxes is welcomed by the user industries and would also lower prices of the final products, observed CII.
The clarification of GST rates on solar power generating plants and other renewable energy products is a relief for the sector, said CII. This would avoid litigation and promote domestic industry.
The media and entertainment sector, which is targeting revenues of $100 billion in the next 4-5 years, had requested the lowering of GST on video game consoles as well as cinema ticket rates. The current rate cut is a relief in that regard, the industry body said.
Further, adoption of single cash ledger for each tax can help reduce compliance complications. The single authority for disbursement of refund amount either by the Central Government or the State Governments is to be taken up on a pilot basis, and would speed up refunds of input tax credit when fully implemented, said the CII statement.
The Federation of Indian Chambers of Commerce and Industry (FICCI) also welcomed the reduction of GST rates on 23 items by the GST council and said that they had taken the landmark reform to the next level by indicating that the 28% bracket is already moving towards a sunset.
With a reduction in the rates on more items in the offing during the next meeting of the GST Council next month and the indication that the remaining issues pertaining to GST application as well as administration will be resolved speedily, the tax reform is set to yield larger gains for the economy.
“The GST council has followed a pragmatic policy by bringing down the rates gradually taking into consideration the revenue realization and affordability and this will stabilize and strengthen GST further. The Government has been pro-actively engaging with various sectors and I am confident that going forward the Council would continue to address these issues. The constitution of the Committee regarding extension of the composition scheme to small service providers for proposing rate of tax and threshold limit is also a step in the right direction,” said Sandip Somany, President, FICCI.