Services like telephony, dining out and banking will get dearer if the recommendations made by the GST panel on the proposed nationwide uniform taxation are accepted as the tax rate will increase to 17-18 per cent from 14.5 per cent at present, experts said.
A Finance Ministry panel headed by CEA Arvind Subramanian has suggested a 'standard rate' of 17-18 per cent on bulk of the goods and services for the entire country.
According to Deloitte (India) Senior Director Saloni Roy: "Services will see rise in prices as the tax rate will suddenly increase from 14 per cent to 17-18 per cent when the GST is implemented."
The government plans to roll out Goods and Services Tax (GST) from April 1. A Constitution Amendment Bill is currently stuck in Rajya Sabha.
The Service Tax was introduced at 5 per cent in 1994 on limited number of services, she said, adding the tax rate has gradually increased to 14 per cent and now covers almost of all services with few exceptions.
In the last Budget, Finance Minister Arun Jaitley increased the Service Tax to 14 per cent from 12.36 per cent. Presently the incidence of Service Tax is 14.5 per cent after including Swachh Bharat cess of 0.5 per cent.
There is no clarity whether the Swachh Bharat cess would be subsumed in the GST or it would be levied over and above the standard rate.
BMR & Associates Partner Malini Mallikarjun said that some sectors, like real estate, may not get impacted as they are not included in the GST.
The CEA-headed panel in its report suggested alcohol, real estate, electricity and petroleum should be included in the GST at an "early stage" in future.
Industry chamber Assocham said: "This rate structure is quite appropriate and will be anti-inflationary for indigenous goods, however the cost of services will go up including some essential services like banking, telecom and information technology (IT)."
The GST panel has suggested dropping of the 1 per cent additional tax on interstate sales and also opposed inclusion of GST rate in the Constitution.
Describing GST a historic opportunity to 'Make in India by Making One India', the panel recommended a range for revenue- neutral rate (RNR) of 15-15.5 per cent for the Goods and Services Tax (GST), with a preference for the lower one.
It also suggested a range of 'standard' tax rate of 17-18 per cent for bulk of goods and services while recommending 12 per cent for 'low rate goods' and 40 per cent for demerit goods like luxury cars, aerated beverages, pan masala and tobacco. For precious metal, it recommended a range of 2-6 per cent.
The final GST rate would be decided by the GST Council, which will be headed by the Union Finance Minister and have state Finance Ministers as its members.
The team of Mr. Arvind Kumar and Kirit Goyal can be
labeled the dream team for businesses to understand anything and everything about GST and its impact. Arvind Kumar has handled the GST subject for the past six years and is well conversant with the government's intent of this policy, while Kirit Goyal has actually worked in GST environments at multiple countries, including India and advises businesses on logistic designs for optimizing resources.
With a mission on educating businesses and eliminating their fears, both authors wrote the book for mass consumption. This book intends to help the readers understand GST better and prepare them effectively for proposed GST regime. It removes the uncertainties around the tax policies and empowers the reader to implement the benefits due to this policy change.
To take this mission one notch further, both authors are reaching out to various businesses and educating them on the impact of GST on various industries by their 'Impact of GST in India' series of free webinars. The first of the webinars will be 'Impact of GST on Retail Companies and Establishments' followed by 'Impact of GST on e-Commerce Companies'. Post the webinars, there will be a question and answer session wherein the businesses can get all their queries answered live.
The details of the free webinars have been mentioned below and the authors have rolled out an open invitation to all businesses for participation and availment of benefits. In case businesses are not able to register for free live webinar, they can follow the link and take benefit of the same with recorded version which will be published after 48 hours of the webinars.
Webinar details:
Webinar: Impact of GST on Retail Companies and Establishments Date and Time: 9th July, 10:30 AM Registration: Register at http://goo.Gl/25N2Cm About Gazelle Information Technologies Gazelle Information Technologies, one of India's leading supply chain consultancy, strives to help businesses plan their supply chain and logistics post GST regime.
About the authors
Mr Kirit Goyal:
Mr. Kirit Goyal is the founder of Gazelle Information Technologies. His experience in ERP with specific interest in supply chain optimization, in countries like Australia, Singapore, Canada, where GST is already implemented gave him a good background on how taxation affects supply chain design. In India, he helped an American tyre company redesign their supply chain with the impending GST in 2010. Subsequently, he worked with other large auto ancillaries in this field.
Mr Arvind Kumar:
Mr Arvind Kumar is presently serving the government of India as Deputy Secretary posted in the Ministry of Heavy Industries, where he is in the BOD of many Public Sector Enterprises like HPC, NEPA paper Mills, Hindustan Salts, etc.
With Graduation and Masters in Economics, an MBA (Marketing) & LLB, he is pursuing a PhD in GST and its Impact of Trade logistics. In past, he also has worked as Under Secretary in Ministry of Finance and has initiated the first file on GST in MOF which led to announcement of rollout of GST in India. From thereon, in next six years, he has dealt with GST on all its aspects and is fully aware of the intent and the objectives of almost every aspect of GST. He will be a great help to industry as well as the policy makers in case of any ambiguities on GST.
Website: http://www.Gazelle.In | Webinar: GST: Utility in India [http://growthpixel.Com/gazelle-webinars] | Find the book on GST: Plan Your Future Tax Journey Now [https://www.Amazon.In/GST-Plan-your-future-journey-ebook/dp/B 01DNA45C2 ]
Media Contact:
Kirit Goyal
Kirit@gazelle.
