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Consumer durables not a luxury item; GST rate should be 18 per cent, says CEAMA


Consumer electronics manufacturers’ association has urged the government to bring refrigerators, washing machines and other electronics of daily use in the 18 per cent slab rate under the goods and services tax () regime, as opposed to the 28 per cent suggested by the Council last week.

Consumer Durable companies foresee growth to prove 2017 profitable
Terming the setback from demonetization as "a short-term phenomenon", the consumer durable makers are eyeing a bigger benefit from GST as it is likely to reduce tax burden, logistical and transactional costs.

“A GST rate of 28 per cent will increase the tax burden on the goods and this would be inflationary,” President of Consumer Electronics and Appliances Manufacturers Association (), Manish Sharma, said after a meeting with finance ministry officials recently.

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“The consumer durable goods are not luxury items, this increased incidence of tax on such goods will impact the consumption and therefore slow down the demand for such goods,” he added, highlighting concerns of the industry which includes players like Samsung, , and Panasonic among others.

Categorising consumer goods as items of mass consumption, the association has requested that the rate on all consumer durable products be kept at 18 per cent. This would also be aligned with the Government initiative of ‘Make in India’ and would curb the inflationary impact, the association said.

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The government took the first step towards creating a uniform tax rate structure for the country with GST, but decided on a four-tiered tax system – 5 pe cent, 12 per cent 18 per cent and 28 per cent – where first three rate slabs comprise goods of mass consumption used by the common populace.

The 28 per cent slab comprises white goods, cars, luxury cars, pan masala, tobacco and aerated drinks.

Additionally, access would be imposed on luxury products and products like pan masala, tobacco and aerated drinks. A committee of secretaries will now allocate items into different tax categories, which is why industry associations are lobbying for their products to be put in certain tax slabs.

The consumer electronics association says that the consensus arrived at the by the GST Council hints at making the tax regime complex for the consumer durable industry.

“Under the suggested tax structure consumer durable product details need to be worked out by the council to reduce the burden of complexity for the industry. Secondly, multiple registrations across states under the suggested GST model might add more hindrances,” Sharma said.