Packaged consumer goods prices are expected to fall by up to 20% with the advent of the goods and services tax (GST), retailers said, even as they attempt to protect their margins by engaging with manufacturers. "With electrical commodities being classified as luxury rather than essential, the highest tax rate of 28 per cent is implied on them making it hard for the medium traders to sustain". Early this month, the GST Council meeting had fixed GST on precious metals and diamonds, including jewellery, at 3 per cent.
This will be exclusive of applicable GST rates.
However, some select medicines such as insulin will see a reduction in prices with the government revising GST rate downwards to 5 per cent from 12 per cent proposed earlier. This has been provisioned under the GST Act where GST Council has been given the power to recommend for the refund of unutilised credit under inverted duty structure case.
However, with states unwilling to defer the provision, the GST Council agreed to rope in National Informatics Centre (NIC) to work along with GST-Network to assess if an all India e-way bill system can be created in a short time-frame, an official said.
He also highlighted the issue of delay in the transfer of input tax credits and inverted duty structure problem of the industry at fabric stage which will aggravate the problem of working capital requirement of the industry.
In a statement, Confederation of Indian Textile Industry Chairman J Thulasidharan said the industry is apprehensive about the made-ups and garment sector as the job work related to these still comes under 18 per cent service tax slab.
While addressing the 16th meeting of the GST Council, Finance Minister Arun Jaitley announced maintaining of 28 percent tax on all cinema tickets above Rs. 100, while of those below Rs. 100 to be reduced to 18 percent.