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A tax partner at a large consulting firm said, "The GST was expected to fill the gaps created by the exceptions and exemptions. But, it is slowly returning, leaving room for tax planning. "
Based on Saturday's decision, the shoe has emerged as an area where many companies plan to reduce retail prices for some of their products. "If there is a product in the Rs 1100-1,200 segment, there is a possibility of reducing the price to push the volumes according to the lowest levy," said a consultant.
There are others who plan to display a retail price of 999 rupees to stay within the proposed 5% GST, but they offer the price only if a pair of socks or another accessory is bundled. While the GST rate on shoes was set at 18%, an exception was made for those who cost up to Rs 500 with a 5% tax. While the demand for a widespread 12% GST cut was rejected by the OEM committee (including agents) citing revenue loss, the panel noted how the dual rate structure has resulted in compliance issues.
The newly introduced exemption for ceilings that cost up to Rs 1,000 – a move that is seen to be intended to benefit Muslims – will create similar problems as most manufacturers are not even in the tax net.
Officials said that the decision to offer 18% GST only for TVs up to 25 inches will create problems. "There would have been little litigation keeping all products under the same rate, but these types of exceptions will create problems," said one agent, for example, they expect conflict-related to the inclusion of the frame in the calculation of the "screen size".
A tax advisor said that a 25-inch screen was not the preferred screen size and that manufacturers in other countries might have to make more series of this cut. "When the definition of a small car – based on the length of the vehicle – was introduced, it first benefited a manufacturer, the others took the time to catch up," said the consultant. .
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