Punjab Industiralists welcomed the passage of Goods and Services Tax (GST) in Parliament with mixed response. While small-scale industries felt that it would harm them, exporters and bigger players have welcomed it.
“At present, micro, small and medium enterprises (MSME) units that earn less than Rs 1.5 crore are exempted from central excise, while in GST this limit is just Rs 10 lakh,” said Badish K Jindal, president of federation of small scale industries of India. “This may lead to an increase of the price of bicycles by Rs 200-300 per piece, and sewing machine and branded garments by 10 per cent. So common man is likely to suffer.”
“Earlier there was no central excise tax on bicycle parts and it was only 2 per cent on complete bicycles. But now both parts and complete bicycle are under 18 per cent GST,” said Jindal. “Government calls it single country single tax regime, but actually there are three laws in one law and there are three taxes (centre GST, state GST and inter-state GST). It is not a simple law, and more than 25 returns are required to be filed by an assessee,” said Jindal.
Upkar Singh, general secretary of Chamber of Industrial and commercial undertakings (CICU) was more positive.
“No doubt unbranded clothes, bicycles are likely to get costlier,” he said. “But I feel that it will be good for a producer states like Punjab. So goods when sent from one state to another will have a single tax and hence we will have one market. It will be good for auto parts manufacturers. I feel that their business will flourish in the coming years and moreover more transparency in the system is likely to come with e-return.”
Jindal, however, did not share the same sentiments regarding transparency.
“I feel that the scope for tax evasion will increase because units can make multiple companies with Rs 10 lakh per annum sale so as to avoid tax. And it will increase corruption as well,” he said. “Even food at Dabhas might come under GST now.”
S C Ralhan, president of federation of Indian Export Organisations (FIEO), said the draft GST Model Law had a few concerns for the export sector which has already been flagged. He reiterated that exemption on the final export products should continue.