An Elephantine Issue Lurks in GST Fine Print

NEW START As India prepares to roll out its biggest tax reform, some doubts crop up & luxe car buyers get reasons to celebrateFinmin clarifies after 5% tax on banned animal products sparks fears of lifting curbs on their trade

Will ivory, banned decades ago by India and many major countries, be legally traded under GST, ask the environment ministry and the Wildlife Crime Control Bureau. No, says the finance ministry, there will be a 5% tax on “unusual restricted trade“.And there by hangs a slightly wild tale of GST confusion.ET spoke to senior officials across departments who spoke off the record on the issue.

There is a ban on trading in ivory, as well as coral, musk, and other so-called products from protected or endangered species, as declared in the Wildlife Protection Act, 1972.

But the May 18, 2017, GST Rate Schedule of Goods placed ivory, tortoise shell, whalebone, corals, shells of molluscs, crustaceans or echinoderms, as well as civet and musk under a 5% tax slab.

Senior finance ministry officials told ET that 5% tax on these products does not legalise trade in them at all.

“Items that are banned will continue to stay banned. But in keeping with international practices and the requirements of the global `Harmonised System of Nomenclature’, a tax slab rate has to be indicated,“ a finance ministry source clarified. The officials said the tax rate will apply only to “unusual“ and “restricted“ transactions in ivory and similar banned items.

The environment ministry , sources said, will write to the finance ministry seeking clarification this doesn’t violate the Wildlife Protection Act and requesting modification of the GST schedule for animal goods to reflect the same.

The matter is already being examined by the environment ministry’s financial advisor.

Explaining further, the finance ministry officials said the GST will apply, for examp le, on a court-or dered sale of the se products that are part of the as set portfolio of an erstwhile royal estate. The tax will be imposed only on such “restricted mo de“ transactions, they added.n these products has The 5% tax on these products has raised concerns in the Wildlife Crime Control Bureau, tasked with policing illegal trade in banned animal products, as well as the Project Elephant unit in the environment ministry . India is also a signatory to the global treaty CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora). Officials said there has been no proposed amendment to the Act.


Clear The Air

It’s a classic case of the left hand not knowing what the right hand is doing. Confusion is inevitable if the concerned ministries are clueless on the bizzare technicalities of GST. The GST law supposedly does not get into the business of whether or not an item is banned. Rates are set for every product including banned items under the presumption that tariff is for perpetuity. Confiscation of banned items is the job of a customs officer. If the GST law is flawed, then fix it.


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