Classification of goods likely to spark the next GST face-off
The government is rejoicing after getting the GST (Goods and Services Tax) Council to agree to the rates and slabs for the new tax, but experts and insiders say that the biggest hurdle is yet to crop up: choosing the goods that would fall into these slabs. A committee of finance secretaries of all states will work on this aspect.
The GST Council, the highest decision making authority for the new tax, last week agreed to a four-tiered GST, with essential items such as food grains, one of the main reasons for rising inflation, getting zero tax. The lowest rate of 5% will be on items of common use, followed by the standard rates of 12% and 18% and the highest rate is 28% on luxury goods.
On top of this, a cess will be levied on luxury cars and harmful products such as tobacco and fizzy drinks.
“A committee will decide the fitment of goods into the fourtiered GST rates. We cannot divulge any more now,” revenue secretary Hasmukh Adhia said.
Top finance ministry sources said this committee is yet to be formed. The demand is to include senior functionaries from all states in this committee.
“But that would become very cumbersome. A committee with so many people will make decision-making even more difficult,” one sources said. The GST Council will have to define luxury and essential goods before the classification of goods even begins.
Experts agree. “Classification will throw up a fresh set of disputes and this may lead to confusion,” Bipin Sapra, tax partner, EY told HT. It may also lead to litigation, experts said.
A revenue official said the classification would be based on elimination. “Once the essential items and luxury goods are classified what is left will fall in to the standard category,” he said.
From Sources:-
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