India could soon be heading towards a simpler Goods and Service Tax (GST) structure from the current five-tier model. Going forward, as tax revenues significantly increase, India will have GST slabs of 0 percent, 5 percent and a standard rate between 12-18 percent for commonly-used items, finance minister Arun Jaitley said on Monday.
The finance minister hinted a future road map could well be to work towards single standard rate instead of two standard rates of 12 percent and 18 percent.
It could be a rate at some mid-point between the two. Obviously, this will take some reasonable time when the tax will rise significantly. The country should eventually have a GST which will have only slabs of zero, 5 percent and standard rate with luxury and sin goods as an exception, Jaitley said.
Stating that only cement and auto parts are items of common use which remain in 28 percent slab, Jaitley said the next priority will be to transfer cement into a lower slab.
In another news, the National Anti-Profiteering (NAA) has found the FMCG major Hindustan Unilever (HUL) guilty of profiteering to the tune of Rs 535 crore. However, since HUL has already deposited Rs 160 crore in the past, it will now have to deposit only Rs 223 crore.
CNBC-TV18 caught up with MS Mani, partner-GST, Deloitte; Pratik Jain, leader-Indirect Tax at PWC and Mauvin Godinho, GST council member, Goa, to discuss the future road map of GST.
Mauvin Godinho said, “As I always say ultimately we have to standardise and rationalise the rates and move to three slabs. Now what inhibits us is looking at the buoyancy in the revenue collection. It has not been completely off the mark but neverthless we are happy with the figure that is working well.”
On Hindustan Unilever (HUL) guilty of profiteering to the tune of Rs 535 crore Pratik Jain said, “It is unfortunate that despite industry asking for again and again about some kind of guidance as to how this has to be computed.
When the rate is reduced the company has to incur a packaging cost because they have repacked the product, re-label the product, he said adding that if they increase the grammage the packaging will be different and whether they will be permitted or not that itself is not clear because you want them to reduce the price or increase the grammage which is economically the same effect.
"One will have to go through the order in more details but unfortunate part for me is that despite industry request no guidance has come in and I think it will go to court and get settled in there so very soon,” Jain added.