NEW DELHI:
 Are toy guns more important for a child’s growth than board games such as scrabble or chess? That’s the question toy makers are asking in India, as they grapple with new GST rates. Toys ranging between remote-controlled cars and chess sets attract an average indirect tax of around 6%. Traditional toys, which constitute about 90% of all toys sold in the country , are exempted from excise, while some states levy VAT of 5-6%.

Electronic toys, which make up the remaining 10%, attract a higher VAT of 12.5-15%.With GST being put in place, not only the overall tax rate will double, some categories, including chess and scrabble, will fall under a higher tax bracket due to lack of clear definitions.For instance, a toy gun will attract a tax rate of 12% under GST compared with a chess board that will draw 28%.

"The GST reform that was announced will negatively im pact the toy industry ," said Ishmeet Singh, country manager -India, Mattel. "Not only there is an increase in the overall tax rate, there are also multiple rates that have been applied within the same category ."

Under GST, the proposed three rates are 12% for toys, 18% for electronic toys and 28% for board games such as chess. KPMG said differential rates specified for electronic toys could lead to litigation regarding what would constitute an electronic toy .

"There is no logic in this," said Vivek Jhangiani of All India Toy Manufacturers Association, an industry body that represents toy makers. "This is against principles of GST of one product group, one rate.How can the government tax educational games that are played by children at 28%?" "Under the new rules, lack of clear definition means that if you take two electronic toy cars that are individually taxed at 18% and put them on a board to race, you will have to pay 28%," he added.

 26 May 2017, 01:52 PM