GST: Hasmukh Adhia warns industry against hiking prices arbitrarily

The GST council has fitted the goods and services in tax bracket of 5, 12, 18 and 28 per cent. Tax experts said that a rise in tax rate for telecom and financial services is likely to hit consumers.

Written by Aanchal Magazine | Srinagar | Updated: May 20, 2017 3:30 am
gst council, tax slab, 4 slab tax rate, tax rate, goods and services tax bill, india economy, business news, indian express news Union Finance Minister Arun Jaitley with MoS for Finance Santosh Gangwar, J & K Finance Minister Haseeb Drabu, Revenue Secretary Hasmukh Adhia and CBEC Chairperson Vanaja N Sarna addressing a press conference on the concluding day of the 14th Goods and Services Tax (GST) Council meet in Srinagar on Friday. PTI Photo

With tax rates for some goods and services likely to go up under the Goods and Services Tax (GST), the government has warned that industry should not take undue advantage to create arbitrage before the rollout on July 1. Revenue secretary Hasmukh Adhia said that even if the machinery for anti-profiteering takes time to be ready after GST implementation, they will have the right to call for information of change in prices retrospectively.

“The machinery for the anti-profiteering authority may not be ready at present but any change in prices will be called into questioned,” Adhia said, adding that any fluctuations in prices will be closely monitored.

The tax department may look into balance sheet of companies if they have gained from GST and whether the benefits have been passed on to consumers.

The anti-profiteering provision was included in CGST law to ensure that there is a commensurate reduction in prices for consumers, if there’s a lowering of tax rate for goods and services.

Union Finance Minister Arun Jaitley with MoS Santosh Gangwar and Reneue Secretary Hasmukh Adhia addressing a press conference on the first day of the 14th Goods and Services Tax (GST) Council at SKICC in Srinagar. PTI Photo

Adhia said the government will soon begin work on setting up an anti-profiteering agency, as proposed in the GST law and the tax department may even initiate suo moto action. “We expect companies to cooperate. We hope we don’t have to use the weapon (of anti-profiteering authority),” he said.

Adhia said that despite the higher standard rate of 18 per cent, service providers will get input tax credit that will lower the effective incidence of GST to around the current incidence of 15 per cent. For services like telecom services, even if a customer is charged an increased service tax rate of 18 per cent as against the existing 15 per cent, Adhia said, the telecom companies should ensure a commensurate reduction in prices to consumers as the companies will be able to avail input tax credit for goods needed to supply those services.

The GST council has fitted the goods and services in tax bracket of 5, 12, 18 and 28 per cent. Tax experts said that a rise in tax rate for telecom and financial services is likely to hit consumers.

“It is welcome to see that the education and healthcare sector is out of GST and transportation services is taxed at 5 per cent. However, the telecom services at 18 per cent may touch the raw nerve of the common man, as that is the only significant service that is used by majority of the population in India,” Sachin Menon, national head, indirect tax, KPMG India said.

“The Banking and financial services at 18 per cent can hurt the common man in wake of banks started charging fee for multiple withdrawals and 3 per cent hike in GST, will increase the cost of banking charges” Menon said.

Bipin Sapra, Tax Partner, EY India said, “The multiple rates of services will bring complexity in interpretation and classification leading to tax disputes. While the efficiencies because of GST design will lower the effective tax rate, the overall rates of services are still higher than expected in some categories like luxury hotels, cinema halls and even essential sectors like telecom which has been taxed at 18 per cent.”

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    May 20, 2017 at 5:00 am
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