After the recent reduction in goods and services tax (GST) rates on mass consumer goods items, Finance Secretary Hasmukh Adhia has stated that he does not foresees any immediate rate revisions after the latest changes, which were incorporated after the last GST Council meet. He added that the latest changes have resolved nearly 90 per cent of problems and discontentment related to the indirect tax regime. He however also said that as and when required, rates on other items may be changed.
The GST Council recently removed 178 items from the highest 28 per cent category and also reduced tax on all restaurants outside starred-hotels to 5 per cent. Adhia said that there was a huge demand to make these cuts and companies, including FMCG firms, might be prosecuted if their retailers do not immediately cut the prices of products whose GST rates have been slashed. He advised companies to “transparently” advertise in newspapers by how much their prices had come down. Items on which tax rates have dipped include detergents, sanitary ware, suitcase, beauty products, chocolates, marble and granite, wall paper, plywood, and stationery articles. He added that making the changes in prices visible would be a measure of their standards of corporate governance.
Elaborating on the medium-to-long term benifits of GST, Finance Secretary said that it will enable ease of doing business resulting in more investments. This he said will push the GDP growth higher and also increase tax buoyancy. A high tax buoyancy will allow the government to directly help the MSME, agriculture and other sectors and would result in more job creation.