EXCLUSIVE: GST’s challenge for the govt is to ensure consumers are not cheated, says CBEC Chief

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Govt concerned about people’s ease, in terms of pricing, bills that they will be getting, and consumers knowing what they are paying

With the Goods and Services Tax (GST) becoming a reality, the industry is grappling with initial implementation and transition related issues. Central Board of Excise and Customs (CBEC) Chief Vanaja N. Sarna told Moneycontrol in an exclusive interview that one of the challenges for the government is that the consumers are not cheated and traders should be able to able to bill the common man correctly under the new indirect tax system.

Globally, implementation of GST had an inflationary impact in the short run. However, in India, Sarna said that the government has tried to make the rate for goods and services revenue neutral under the new system. Rates for some items have been fixed at a lower rate, even below the revenue neutral rate, so that consumers do not suffer.

That said, the industry may take some time to pass on the benefits of input tax credit on final consumer, she said.

Edited excerpts:

Now that GST has been implemented, what is the government’s immediate plan of action?

Sarna: Our immediate concern is implementation and the problems that we may have during it. There is less concern on filing of returns as the date has been pushed. There are more concerns on migration and registration, which is still going on. We are more concerned about people’s ease, in terms of pricing, in terms of the bills that they will be getting, in terms of consumers knowing what they are paying. There has been a lot of mass campaigning to touch traders and the industry. We are doing a lot of advertisements in the paper for the consumers. We are stepping that up so that people can get to know a little more. We are trying to reach out to consumers itself if they are aware of what is going on.

What are challenges that you foresee? There is a lot of fear among consumers that prices of goods and services may go up. The industry is also grappling with implementation issue. How do you plan to address this?

Sarna: The first challenge is that the consumers are not cheated and the traders should be able to bill people correctly. I have done a bit of an examination of the system on the day first day after roll-out of the new tax system. Lot of big stores, such as Big Bazaar, have put banners outside to put out rates. We have done advertisements on rates that they have come down. That education to consumer will automatically translate. As far as big industries are concerned, they have said that they are prepared. They have known about this since the month of April and have been able to tweak their systems, making their systems ready. Perhaps, for them it is not much of an investment issue. What has happened with the small traders is that education about what needs to be done.

Secondly, they need to know how they can tweak their system. We are giving them a lot of help. All our officers are in the GST Seva Kendra. We have given specific instructions that you will have to give assistance to anybody who comes to you. I think we should be able to address this. Our bottom most office, which has the range officials, they have been trained.  They have standalone laptop and computers and are hand-holding traders to file their papers. As you already know, there is a offline where you can do everything offline, at a slow pace. You need internet connectivity only for filing returns. So lot of things have been done to ease the pressure of assessees.

Can you give us an insight on the GST ‘war room’ or the feedback and action room?

Sarna: It has been there for the last 10 days or so. Such a facility has been set up more for our government officials. This is for the state and central government officials as well as for ministries. If they have a query, they will have to take up to the officials in this room. There are eight people manning it and the room remains open from 8 am to 10 pm.  If the issues are simple, the officials will address it. If it is a complex issue, it will be passed on to the policy wing (of CBEC). There has been a lot of questions are coming on GST Network (GSTN). These questions are being diverted to GSTN.

How often will the GST Council meet to take a stock of issues?

Sarna: The GST Council will meet on a monthly basis, starting August. The next meeting is likely in the first week of August. There will be meetings every month, at least for the first few months, so that the Council can look at certain issues, which may come up.

Is the Council still open to revise rates?

Sarna: In one of the earlier Council meetings, rate changes had come up for 133 items. Rates for 66 items were finally sorted out. But there is no stopping for people to request revision of rates. As an industry, I may request the fitment committee of the Council on two grounds. One, the fact that there has either been an error. Let’s say items have been left out or it is not clear (due to error in calculation by the fitment committee). Other, is that my rate is not revenue neutral. The government has said that the GST rates is revenue neutral, but an industry may notice that despite taking embedded duties there is still a gap. I see people are bringing their wishlist—I wish instead of 12 percent, it is 5 percent. I don’t think that it is right to consider something like this from the Council. Because, there will be a time for this as well if it is justified.

Do we see any revision in rate in the future?

Sarna: Look at it like this way. In every budget, industries come up with requests of various types. Those are studied and the revenue itself is also looked at. It will an exercise like that. But I don’t think the policy (GST) will be about rates all the time.

Globally, implementation of GST had an inflationary impact initially. Will India be an exception to this trend?

Sarna: The day rates were fixed, it was made as revenue neutral as possible. We would be running more or less on the same lines as pre—GST. As a matter of fact, certain items have been exempted and some of them have been fixed at a lower rate, even below the revenue neutral rate, so that consumers do not suffer. We have ensured that goods of common use should be kept at a certain bracket. To that extent I don’t expect it to be inflationary. But as you know, there are complications of input tax credit. So, till companies don’t calculate the benefit—say for certain services it was 15 percent, which has now gone up to 18 percent, the cascading of taxes will now go and companies will get input tax credit.  Perhaps, companies have not worked out the effect of that. That trickle down effect will eventually happen.

When do we see the setting up of the anti-profiteering committee? Industry has been worried about the lack of clarity on specific rules and methodology. Will the government release more specific guidelines?

Sarna: Rules for anti-profiteering has been finalised. The body is there to address issues related to profiteering and we will set it up as soon as possible. When the committee is set up, there will be some guidelines that the committee will follow.

Source : http://www.moneycontrol.com/news/business/economy/exclusive-gsts-challenge-for-the-govt-is-to-ensure-consumers-are-not-cheated-says-cbec-chief-2318839.html

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