JOIN US'Dealers to gain from GST, must pass on benefit to consumers'
Commissioner for Commercial Taxes Ritvik Ranjanam Pandey on Monday said consumer goods, electronics and ready-made garments are likely to become cheaper after Goods and Services Tax (GST) comes into force.
Prices of certain services that are provided using the goods may also come down in the long run. The proposed GST, which is likely to come into effect from April 1 next year, will subsume all indirect taxes. This will directly benefit manufacturers and dealers. And they have to pass on the benefit to consumers by reducing prices, he said at an interaction programme on GST organised by the Karnataka Media Academy and the Federation of Karnataka Chambers of Commerce and Industry (FKCCI).
But prices of services may go up. Those into the export and transportation businesses are expected to benefit. However, it is too early to predict which item will become more expensive or cheaper. It will be known after the GST rate structure is finalised. Chief Minister Siddaramaiah will take a final call on the rate of tax that Karnataka would recommend to the GST council, he added.
Pandey said GST will usher in uniformity in tax rate and the business process. The new regime will end problems connected to the payment of excise duty, Central sales tax and state sales tax. “For instance, dealers involved in inter-state sale of goods have to currently go through a complicated process of maintaining form ‘C’ to claim tax concession. One has to preserve the form for five years. If not, one is not entitled to the benefit,” he added.
But the state government will continue to impose sales tax on fuel for at least another five years, after the implementation of GST. Besides, the state government-imposed taxes on liquor, stamp duty and registration fee on properties will also continue, the Commissioner said. He said the age-old check posts installed to monitor inter-state movement goods will be done away with in a phased manner under the new tax regime. Karnataka has 13 check posts across the state. “There is no place for check posts under the GST regime. But it is left to the states whether to remove them soon after the introduction of GST or in a phased manner. In Karnataka, check posts will be removed in a phased manner. However, we will continue with random checking of movement of goods,” he added.
Tax arrears from photography firms
Pandey said the state government has decided to collect tax arrears for five years from companies involved in supply and processing of photographs. The firms such as Pro Labs had in 2005 challenged in the Supreme Court the state government’s decision to impose sales tax on them. The firms argued that supply and processing of photography does not come under the definition of goods. But the apex court upheld the government’s stand last year, he added.
“I agree that processing of films is no longer relevant in this digital era. Hence, the government was in two minds on collecting arrears. It has been decided to collect arrears only for five years. It works out to be around Rs 70 crore. The dispute was mainly because of confusion in interpreting of the law. GST will end all such confusion,” he said.