Cabinet Secretary chairs interministerial meeting, focus on timely GST 2.0 rollout

“The idea is to have a centralised coordination among the ministries to oversee the GST 2.0 rollout by September 22. The implementation date has been decided and the economic ministries have to be ready for the transition and work towards a smooth rollout. These ministries are in touch with industries in their sectors and therefore, have a better understanding of the sectoral issues which need to be resolved,” an official told The Indian Express.

There is also concern about whether companies have enough time to readjust their labels for existing stocks as the government has appealed to the industry to pass on the benefits from GST rate cuts to consumers. As offtake from stores had slowed down in anticipation of the GST rate cuts over the last one month, most companies are tackling issues related to inventory and stocks in the pipeline.

“The ministries have to coordinate with their respective industry groups to ensure that the impact of this price cut is passed on to the end consumer. That’s also on the agenda”, the official said.

Industry representatives have connected with their line ministries to raise their sectoral hurdles with the Cabinet Secretary. The Ministry of Heavy Industries, for instance, is likely to raise the issue of cess adjustment in the auto sector in the meeting, officials said.

While the industry has found relief in a large section of the value chain, items such as bicycles, tractors, fertilisers and some types of textiles continue to face inverted duty structure — where the duty on inputs is higher than that on finished goods. Representatives from the bicycles, tractors, and fertilisers industry have reached out to the government to address problems of inverted duty structure. For instance, steel continues to attract 18 per cent GST while final products like bicycles and e-bicycles are in the 5 per cent GST slab. Among textiles, a few items such as the inputs required for polyester fibre and textile machinery, or inversion on account of packaging costs and government subsidies on fertilisers has resulted in continuation of inversion.

The textile and apparel industry representatives have also flagged the distortion resulting from different GST rates on unstitched fabrics (5 per cent) and stitched apparel exceeding Rs 2,500 per piece (18 per cent).

Industry sources said that if there is a risk of substantial amounts getting stuck within the refund process, it gives way to tendencies of evasion.

The Central Board of Indirect Taxes and Customs (CBIC) has also begin holding interactions with its field formations to gauge the impact of GST 2.0 in terms of revenue loss and compliance in their respective zones. Through this week, field officers will be reaching out to trade and industry leaders to understand their implementation issues for GST 2.0 and conduct a series of outreach programmes, officials said.

The GST Council, which held its 56th meeting last week, cleared next-generation reforms under the indirect tax regime, paving way for a broad two-slab structure of 5 per cent and 18 per cent, with a demerit rate of 40 per cent rate only for super luxury, sin and demerit goods. The aim is to lower tax burden on common people with sweeping rate cuts and reduction in GST slabs, ease blocked working capital, and facilitate ease of doing business with automated refunds and registration process. All the rate changes, except those for tobacco and tobacco-related products, will come into effect from September 22.