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BS Round Table Conference on GST 2017 – Tax slabs to be reduced in the next couple of years

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It is said that the slabs under the goods and services tax (GST) might be reduced from four to three over the next couple of years as the GST stabilizes. Mr. Manish Kumar Sinha, who is the commissioner of Central Board of Excise and Customs (CBEC) said that they are looking to bring down the slabs to three clear rates in future. He also added that it was just his opinion and the political leadership might take the final decision.

He said that there could be one standard rate and two more rates, one above the standard rate and one below the standard rate for few items. A standard rate would thus mean merging the 12% and 18% tax slab. Currently, there are cesses above the 28% rate as well, such as the gold is taxed at 3%.

Mr. Sinha also mentioned as to how the tax rates are finalized. He assured that the rates were not fixed in a vacuum, in fact, these rates were decided by the revenue neutral rates (RNR). But in the first stage, not much consultation was done with the industry.

However, when the rates would be rationalized in future, the industry would be consulted widely. When the rationalizing is exercised, it takes time and is considered a complex activity as it has to be made sure that a particular sector is not adversely affected.

Mr. Sinha talked about this in the Business Standard Round table Conference on GST. The conference was also attended by GSTN CEO Prakash Kumar, PwC India indirect tax head Pratik Jain, Rajdeep Dasgupta who is the CFO at PepsiCo, NSDL e-governance CEO Gagan Rai and Nishant Shah who is a partner with ELP.

When asked if there were any significant differences on the level of preparations when it came to transition and migration to the GST for the big and the small companies. Dasgupta, who is the CFO at PepsiCo was of the opinion that PepsiCo started preparing early for the GST and hence found the transition very smooth. He also mentioned that it was not necessary that a particular company needs to be big. There were small companies who coped well with the transition as they were very well informed.

Mr. Navin Kumar, who was the former chairman of GSTN said that an internal study conducted by the GSTN on the growth rate of assesses estimated nearly 4,00,000 registrations. However, everybody’s expectations were broken when the number crossed the 2 million mark.

As per the GSTN CEO, Prakash Kumar, as many as 30,000 new businesses were registering every single day, which eventually means a million registrations in a month. The GST registrations, he added were all clean as compared to the VAT as the system did not accept invalid PAN cards. During the pre GST Era, various entities had given an invalid PAN number for the VAT.

On the data protection and encryption side NSDL CEO Rai said that given the amount of data that is being captured now, the primary focus was to protect the data and keep it safe. There have been instances where the network has been under cyber-attacks from Pakistan and China. There were days with as many as 450 attacks in a single day, he added. NSDL, on the whole, has been one of the major solutions providers for the GST.

Nishant Shah who is a partner with ELP said that though there were few issues in the initial stages later, the trade and industries realized that GST was going to be beneficial for them in the longer run.

To questions such as if the GST led to an economic slowdown, Sinha said that the GDP growth was slow due to many factors and not because of GST. He said that GST was very successful as it did not lead to a spike in the prices, there was no scarcity of goods and services, and the common man accepted it. He also mentioned that the inflation was under control.

On the last question asked as to why only 5% was charged on ghee and zero on mutton, he said that the rational was that any item that was not in the category of processed foods would be rated zero..

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A pure vegetarian, who believes in reincarnation & law of karma and follows the philosophy of “Live and let others Live” because all living beings have equal right on the resources of this planet. Being from a finance background, he loves to write about business aspects of the trends.

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