The standard tax rate near 18 per cent under GST will prove to be an ideal one and in all probability, will not stoke significant inflation as assumed by many, the Confederation of All India Traders (CAIT) today said.
However, finalisation of the tax rate depends much on classification of goods and services under the exempted category and also under nominal tax rate which may be 1 per cent, CAIT said in a statement.
CAIT national President B C Bhartia and Secretary General Praveen Khandelwal said that under the current VAT regime, items placed under the 5 per cent tax slab will be attracting standard rate of tax, which may be 18 per cent, and it is feared that such a situation will lead to inflation.
However, it may be noted that goods placed under 5 per cent are largely used as raw material for finished goods and have been attracting excise and service tax so far with no advantage of input credit for MSME.
Under GST, these will be placed under a higher slab and will be eligible for input tax credit for not just goods but services.
In spite of all these mathematics, in initial days, there might be some inflation which will subside once the taxation system is duly adopted in its letter and spirit, the statement added.
Stressing on the need for unification of taxes levied on goods and services, the functionaries said that for any business of goods trading, support of service sector is required since both compliment each other.
Both Bhartia and Khandelwal are of the view that major challenges will come from implementation and compliance since the GST tax structure is entirely based on e-compliance mechanism.
Govt notifies new rule for MSMEs:
Government has notified new rules for micro, small and medium enterprises (MSMEs) to furnish information in the prescribed format.
According to the Micro, Small and Medium Enterprises Development (Furnishing of Information) Rules, 2016, MSMEs need to furnish basic details to the central government online in the databank maintained by it.
These include Aadhaar number, Udyog aadhaar, PAN, Enterprise Social Category, the authorised person’s name, nature of operations and the like.
The government also wants to know if an enterprise is using solar energy in the organisation/factory or wishes to use it, or it has a joint venture or plans to have one or it is interested in foreign fairs or wishes to import technology in the additional requirements category.