Wednesday, September 18, 2019
By Kamal Swami
Relaxation To The Auto Sector By GST Panel In Doubt
A recent study to assess the financial burden lowering the GST rate from 28% to 18% for the auto sector will cost the loss of Rs. 50,000 crore ($6.95 billion) annually on the government. The study was conducted by the GST panel before its meeting on September 20, 2019. According to the reports, apart from deciding the impacts of GST on various industries, the panel will also think on the option of lowering the tax limit for the auto sector, due to which the is believed to face the huge decline in sales during last nine months.
Commenting on the results revealed in the study, two of the government officials said it is clear that lowering the rate of tax to 18% from 28% means a huge revenue loss to the government, due to which there are chances that panel may not approve the proposal and think for the other options that could help in boosting the sales of the auto industry.
In between the government officials serving the states of Punjab, Kerala, and West Bengal have also said that they will oppose the decision related to reduction in tax rates for the auto industry or other sectors due to weak collection of tax during this financial year. According to the reports 20 of the Indian states recorded the decline of 7% in the total tax revenue earned by them during the months from April to July 2019. The states like Andhra Pradesh, Punjab and Rajasthan recorded the huge decline of 59%, 12.5% and 35.5% respectively.
It would be interesting to know that the panel constituted for deciding the GST is chaired by Minister of Finance, government of India followed by finance minister of all the states as the members. Any decision by the panel is taken on the basis of the vote. Meanwhile, commenting on the existing situation, Mr. Thomas Isaac, Minister of Finance, Kerala said, “I will oppose any reduction for the simple reason that it won't be revenue neutral.” On the other side, Mr. Himanta Biswa Sarma, Finance Minister, Assam, said, “In my view, if the centre feels that it is good for the economy, and they will be able to compensate the states, then the states should support the proposal.”
The meeting of the GST panel slated to be held on September 20, 2019, is expected to be watched closely by the investors to evaluate the government’s intentions of revamping the economic growth of the country.
