The Confederation of All India Traders (CAIT) said that classification of different items under various tax slabs of GST has created an environment of anxiety and concern among the trading community across the country leading various verticals of retail trade demanding lower tax on the items being dealt by them since they have been categorised under higher tax slab in comparison to tax slab of current VAT tax regime.
As per an analysis about 1,211 goods and 36 services have been so far classified under GST out of which nearly 50 per cent goods have been placed under 18 per cent rate, 14 per cent goods under 5 per cent rate, 17 per cent goods under 12 per cent rate and 19 per cent goods under 28 per cent rate. The GST Council is yet to decide tax bracket for items like Textiles, Gem & Jewellery, Footwear etc. In view of growing discontent about proposed GST rates, the CAIT has urged the Government to revisit the rate schedule.
The wider impact of the classification of items under different tax slabs needs to be gauged very cautiously since under GST not only the taxes paid on goods but even the taxes paid on the services will be eligible for input tax credit whereas on the other hand taxes paid on inter-state purchases of goods or availing services will also be eligible for input tax credit. Hitherto, both these advantages were not available under VAT tax regime. Therefore, impact on the prices of commodities will have to be drawn after calculating advantages of input tax credit.
However, items like auto spare parts which are under 5 per cent VAT slab have been placed under 28 per cent, though milk is exempted but ghee and butter have been placed under 12 per cent GST slab, items related to construction and infrastructure like cement, builders hardware, iron and steel have been placed under 28 per cent expecting housing and infrastructure costly under GST regime, general consumables like Turmeric, Zeera, Red Chilly, Dhania which are farming items in nature have been placed under 5 per cent instead of exempted goods unlike other food products, hand bags, wallet and like items have been under the slab of 28 per cent, marble, stone, iron and steel, plywood etc. used for construction of buildings have been covered under 28 per cent etc. pickles, sauces, instant mixer and some of the other items pertaining to food processing have been placed under 18 per cent tax slab though these are consumed by large number of common people across the country. Though utensils are in 12 per cent tax rate but other incidental items like cutlery have been placed in 18 per cent tax slab. School going children use items like crayon, pastels have been under 12 per cent tax rate. Though contraceptives have been under exempted category but women hygiene product sanitary napkins has been placed under 12 per cent tax rate.
The CAIT has suggested that to make transportation more economical and effective the tax slab of tyres and tubes pegged at 28 per cent tax slab may also be reduced to a lower tax slab.
CAIT National President B.C.Bhartia and Secretary General Praveen Khandelwal said that while carrying out fitment of goods under different tax slabs of GST, the motive is to expand the tax base, no cascading impact on prices and easy compliance of the taxation system. In furtherance of the same, the CAIT has suggested the Government to constitute a joint committee of senior officials and representative of trade and industry to iron out the difference of opinion on tax rates.