Finance Minister Arun Jaitley met industry representatives on Thursday, a day before the roll-out of the goods and services tax (GST), and urged them against increasing prices.
Executives of Hindustan Unilever, Procter & Gamble, Airtel, DLF, Amazon, Grofers, Wipro, Mondelez, Johnson & Johnson and Liberty, along with industry chamber members, met Jaitley in North Block late in the evening. The FM took stock of industry preparedness for the GST and pitched for price reductions after the tax was imposed.
“The finance minister asked the industry representatives to pass on the benefit of the GST to the end user. The broad message was that the GST should not be inflationary and that prices should either remain stable or come down,” said an official on condition of anonymity.
Calculation by different players during the hour-long meeting showed the effective rate on shampoos, chocolates, and aerated waters will marginally increase, but that for coffee, soaps, biscuits, and juices will marginally go down.
E-commerce giant Amazon said it was happy with the deferment of the 1 per cent tax collected at source, but slow registration for the GST was a problem. “Amazon said the registration process should be expedited,” said a source.
On area-based exemptions for the Northeast and hilly states, the government told industry that the Department of Industrial Policy and Promotion (DIPP) was drafting a policy. It was suggested that the central GST (CGST) of 58 per cent of value addition be given as reimbursement.
Industry representatives also raised concerns over the GST Network not allowing multiple registrations in the case of different business verticals on one Permanent Account Number or PAN.
The broad message from industry was they were ready, but expressed concern with regard to the preparedness of small dealers and traders.
“Industry said while they were ready, the small players were not,” said another official.
Industry said they would be in a marginally better position with the GST, but prices would be left untouched at this point.
“Industry was gearing up and appeared to be ready for the July 1 roll-out. Though there might be minor teething issues, these would be addressed in time. The government is very supportive and it is a joint endeavour to move to a better tax regime,” said Saloni Roy, senior director, Deloitte.
Scenes from the war room
Revenue Secretary Hasmukh Adhia also conducted a video conference with central and state government officials on Wednesday to hear their concerns and questions.
“The revenue secretary heard officers on problems they anticipated over the next few days,” Central Board of Excise and Customs Chairperson Vanaja Sarna told Business Standard.
Sarna herself conducted a video conference with officials from all states. Most of the officials asked for speedier notifications for a smooth rollout of the GST.
“We told them that some notifications were with the law ministry for vetting and would be issued shortly,” she said.
The CBEC was also apprised of any strikes or protests against the GST. “We discussed how to go about these protests,” Sarna added.
Customs officials shared concerns over the integrated goods and services tax for goods that had duty paid on the midnight of June 30. “The customs department will issue guidelines for that,” Sarna said.
The CBEC will be renamed the Central Board of Indirect Taxes and Customs (CBIC) from July 1.
On the political front, Union ministers and Bharatiya Janata Party leaders have been asked to fan out across the country to reach out to traders’ bodies and SME associations. Party leaders will visit state capitals and trading centres between July 2 and July 7 and have been provided material related to the GST.
The CBEC feedback and action room with 10 officials is handling queries from various departments of the states and the Centre and directing them to the department concerned.
More than 50 information officials will be on duty in Parliament for most of the night on June 30. Officials said there would be a dedicated team for social media outreach while others would issue releases in all languages. That apart, information will also be sent out on happenings in Parliament.
Officials said a team had been set up to coordinate with the Prime Minister’s Office (PMO), which will closely monitor the roll-out.
A war-room meeting of information officials has been scheduled just hours before the event. Ministers and department heads, particularly those who have large financial or public dealings, have held meetings with their staff to oversee preparedness.