New Delhi:
Excise collections may take a hit as dealers are
refraining from purchasing goods from manufacturers as they are not sure
about tax credits and rates under GST, which is slated for 1 July
launch.
The GST council will meet on 18-19 May to decide on the rates, and
officials said tax rates of as many as 6,000 products have to be
decided.
In view of this uncertainty and also the transitory
mechanism for availing of credit on tax paid prior to the GST kick-off,
dealers are choosing to wait and watch rather than buy and holding on to
inventories. This state of flux will have a direct bearing on excise
collections during April-June, said experts.
PwC National Leader
(indirect tax) Pratik Jain said that given the apprehension about the
loss of credit in the case of transition stocks, there is an attempt to
reduce the inventory level, which is impacting the sales of most
consumer products in the current quarter.
"Therefore, excise duty
collection this quarter may fall unless the government provides higher
percentage of deemed credit (currently proposed at 40 per cent of
CGST)," Jain said.
GST will subsume 10 different levies,
including excise, service tax and VAT, and will create a unified market
for seamless transfer of goods and services. The
GST council,
comprising union and state finance ministers, has decided on a four-tier
tax structure of 5, 12, 18 and 28%. Besides, for demerit and luxury
goods, a cess will be levied on top of the peak rate. The cess will be
used to compensate the states for revenue loss arising out of GST
implementation.
The fitment committee comprising central and
state officials has worked out tax rates on various goods and services
and the report will be placed before the GST council at its 18-19 May
meeting. Tax rate closest to the present incidence on a goods or service
will be chosen with a view to keeping the shift from the present regime
neutral for consumers.
The tax rates will be decided in a fashion to keep their impact on inflation as well as revenues to the government near neutral.
15 May 2017, 01:13 PM