On Tuesday, the Central Government revealed that the prices won’t take a hike owing to increasing incidence of tax. Instead, they are expected to lower down under the GST (Goods and Services Tax) system.
At a GST meeting, Hasmukh Adhia—Revenue Secretary—informed reporters that nearly 60% of the Centre and states income comes from items attracting 12.5% excise duty and 14%value added tax. There can be an expected decrease in the tax under GST on each of these items.
Adhia further said that despite the fact that most of the services under the GST regime will be taxed at 18%, as against the present scenario of 15% service tax, a majority of these would receive input tax credit on purchases. This will result in the overall tax incidence to be constant. He further added that nearly 18% service tax will become the same to that of 15%. There won’t be a drastic increase in the service tax. However, there a minor tax increase for some services can be expected.
“There is a possibility of more than one service tax rate. It is not essential that all services will have 18% tax. Abatement will be taken care of and considered. For a small amount of services, the rate will be determined considering the abatement that it attracts. For these services, the rate would be less than 18%,” Adhia further added.
The Revenue Secretary mentioned that the government will seek to finalize the tax rates for every item as soon as possible. He further said that the government would soon issue the rules under the law regarding the GST Compliance Rating provision for an assessee.
“The GSTN (GST Network) system will provide with the track record of taxpayer concerning the compliance level, specifically the ones regarding the on-time supply invoices uploading that give particulars about the auto reversals, which have occurred for supplier-issued invoices. In case a taxpayer tries to escape tax, the GSTN software will detect that and reduce the compliance rating,” the Secretary further added.
Adhia also mentioned that the government is planning to implement GST from July 1.