Monday, June 27, 2022

CAIT suggests FM to make fresh review of GST tax slabs

Jamshedpur, April 19: Citing several reports which appeared in different sections of the media about possible introduction of a new tax slab of 3% and 8% and scrapping of 5%  tax slab, the Confederation of All India Traders (CAIT) in a communication sent to Union Finance Minister Nirmala Sitharaman has welcome the move of  rationalisation of the GST tax structure but suggested that while drawing a list of items that is likely to be placed in different tax slabs there is a need to draw a distinction between the goods pertaining to necessity and privileges and accordingly the goods should be placed in the right category.

CAIT National Secretary General Praveen Khandelwal and National Secretary Suresh Sonthalia said that currently there is a disparity in different items falling in different tax slabs, therefore a fresh review should be done of items falling in various tax slabs and to be placed in right tax slabs.Accordingly, a basic fundamental may be drawn on the lines that foodgrain, items of education, medical and other items of basic necessity may be placed under exemption category. Other essential items including textiles & footwear upto Rs.1000 value and raw material may be placed under 3% tax slab and various items currently in the 5% category be placed under 3% tax slab and some of the remaining items of 5% tax slab may be put under 8% tax slab.

The 12% and 18% tax slab should be abolished and a new revenue neutral tax rate of about 14% may be introduced. Some of the items of daily necessity and other verticals currently in 12% tax slab may be placed under 8% tax slab and all items of 18% and some of the items of 12% may be placed under 14% tax slab. Lists can be drawn for the items of 5% to be placed in 3% and 8% based on their usage and likewise items of 12% which may be shifted to 8% and 14% may also be differentiated on the basis of their usages.

Both trade leaders said that under 28% tax slab, only the goods pertaining to luxury and privilege should be placed under 28% tax slab and rest of the items like auto parts etc currently in 28% tax slab should be placed under 14% tax slab. Vehicles less than Rs.20 lakhs should be placed under 14% and rest of the vehicles above Rs.20 lakhs being luxury goods should be placed under 28% tax slab. The rate of tax on raw material of goods should not be more than the finished goods so that there is no inverted tax under any industry. With the above suggested tax structure, there will not be any shortfall in tax revenue; rather the revenue will increase yearly and the tax net will become more widened.

Khandelwal and Sonthalia further suggested that the compensation cess should be done away with . The compensation cess adds to the cost as the ITC of the same cannot be claimed against the outward supplies of goods and services. The turnover for the composition scheme should be increased to 5 crores from 1.5 crores.

The rate of taxes on goods and services should be determined keeping in view that the ultimate consumer is not burdened with taxes at a higher rate. Similarly it has to be kept in mind that traders and small scale manufacturers are able to stand in competition with high scale benefit takers corporate entities. It is necessary to keep in mind that the existence of small businesses is necessary for the growth of the economy. On the other hand both Central and State Governments should be conscious enough and must ensure that tax revenue must not be given as freebies to any section of the people. It is high time that different political parties ruling various Governments should be made accountable in using tax revenue because freebies always prove to be a burden on taxpayers.It should also be kept in mind that the consumers should be able to meet its both ends with limited sources of income-said Sonthalia.

Leave a Reply

Stay Connected

- Advertisement -spot_img

Latest Articles