GST tax-structure should be simplified rather than made complicated to check tax-evasion
Bureau,Odishabarta
New Delhi:It refers to media-reports about a Group of Ministers (GoM) to examine feasibility of levying Goods and Service Tax (GST) on products such as pan masala and gutkha on the basis of the installed manufacturing capacity, rather than production to minimize chances of tax-evasion. Presently products like assorted tobacco items, pan masala, aerated water etc attract highest GST rate of 28% and also compensation cess on tobacco products at rate of rupees 4170 per 1000 sticks or 290-percent ad valorem while on pan masala at rate of 135-percent ad valorem. System of imposing cess should be replaced by special GST-rates in multiples of 50 or 100 percent inclusive of existing GST-slab of 28-percent irrespective of production or installed capacity.
GST-regime has witnessed hundreds of changes in short period of its introduction with system being made more and more complicated with unchecked tax-evasion due to faulty system of Input-Tax-Credit (ITC) and many GST-rates. Currency-circulation has increased tremendously after introduction of GST because of left-out GST invoices by actual consumers sold to claim false ITC. There should be only three GST-rates normally say 0, 10 and 30 with additional slabs in multiples of 50 or 100 percent on demerit luxury items abolishing existing slabs of 3, 5, 12 and 28 percent. In such a scenario, concept of ITC may only be for tradable commodities abolishing it from manufacturing and service sector. Manufacturing sector will get compensated in respect of ITC because of huge GST reduction to just 10-percent from normal 18 or 12 percent on items used in production. It will auto-remove situations like using a part with 28-percent GST being used on a finished product with 18-percent GST requiring GST-refund. Public-exchequer will get much-much more revenue because of removal of ITC from misusing manufacturing and service sectors thus largely compensating for heavy reduction GST by replacing 12 and 18 percent slab by a 10 percent slab. Exchequer will be further compensated by replacement of gimmick lower slabs of 3 and 5 percent by a uniform 10 percent slab. Members of public will also be ultimately benefitted especially by huge reduction of 18 percent slab in service sector.
There should be only quarterly and annual GST-returns even though collected GST may be required to be deposited by 10th of next month.
#Input;Mr.Subash
