Government looks to rework GST on mobiles, footwear
NEW DELHI: The government is looking to rework the GST structure for a host of products, ranging from footwear and fertiliser to mobile phones and medical equipment and tractors and textiles, where the levy on the final product is lower than the inputs and raw material.
This results in a situation where the government has to annually refund taxes of around Rs 20,000 crore, while industry has to queue up to get the money back.
“It creates unnecessary litigation and distortions,” said an official, pointing out that manufactured goods in the lower rate slabs of 5% and 12% suffer from what is called inverted duty structure.
To tackle this, the government can either raise the GST on the finished product or lower levy on inputs and raw material. But lowering of rate may not be possible in case of items in the 5% slab.
A presentation shared with the states has listed close to two dozen items, including LED lights, renewable equipment, tractors, generators and inverters, agarbatti, agriculture machinery, bicycles, utensils and water pumps. In several cases, the inverted duty structure is the result of tinkering with the rates over the last two-and-a-half years.
A panel of officers looking at reworking GST flagged the issue in a presentation for the GST Council and pointed out that tax liability on certain finished products remain lower than what is paid on raw materials and services and companies claim refund of the extra taxes paid.
A decision could not be taken as the ministers wanted a more in-depth analysis of the issues that were raised.
Source- Times of India.
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