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  3. Goods fully exempted from excise duty and VAT by states should be GST exempt: India Inc

Goods fully exempted from excise duty and VAT by states should be GST exempt: India Inc

31 Aug 2016 Evaluate

India Inc has suggested that the goods which are fully exempted from the levy of excise duty and VAT by all the states should be categorised as exempted goods in the GST regime as well. Following a meeting with the Empowered Committee of State Finance Ministers on the Goods and Services Tax, the Federation of Indian Chambers of Commerce and Industry (FICCI) also said that a minimum six month time should be permitted from the date of the adoption of the GST Law by the GST Council.

FICCI said that goods chargeable to nil rate of excise duty but charged to VAT in most states could be identified for levying a merit rate of GST. All other goods (except jewellery and demerit goods) could be subjected to the standard rate. As per current indications and reports, goods will be categorised as being subject to merit rate of 12%, standard rate of 18% and demerit rate of 40%.

The India Inc has said that any rate above 20 per cent would have an inflationary impact and would negate the likely benefits from GST. Therefore, it said that a reasonable standard tax rate of 18 per cent would not only deter inflation build-up, but would also protect the consumer's incomes and interests. It further recommended that valuation provisions under GST, which is a transaction based tax, should give primacy to actual transaction value. GST Law should provide for seamless movement of goods without any rigid administrative requirements that will delay transit and add to costs. There should be a foolproof mechanism of movement of goods between states and a single registration process, and industry should not be subjected to dual administration of assessment, audit, etc both by the Centre and states.

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