Keen to let the new indirect tax system rolled out on 1 July to stabilize, the government on Wednesday said it is not prepared to make any revision in the goods and services tax (GST) rates, including in the textiles sector, unless a compelling anomaly is pointed out.
A senior finance ministry official reiterated that handholding businesses and traders during their transition to GST is the government’s priority, not penalising taxpayers for procedural lapses.
“Unless there is something fully justified, unless there’s an anomaly, I don’t think we have any reason to revise rates at the moment,” Central Board of Excise and Customs (CBEC) chairperson Vanaja N. Sarna said here at a conference on ‘Transition to GST Implementation’ organised by lobby group Confederation of Indian Industries (CII).
Textile traders in Surat, who were on a two-week-long strike against the imposition of 5% GST on textiles, called off their strike on Wednesday in the hope of getting a rate relief from the federal indirect tax body, the GST Council, at its next meeting in August.
Finance minister Arun Jaitley had on Tuesday informed the Rajya Sabha, in response to a question, that textile traders’ demand for tax exemption for fabrics cannot be accepted as it will break the chain of tax credits. Besides, nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of tax on items that go into production, the minister said.
Besides, the government does not want other sectors to raise demands for rate cuts if it concedes to the demand of one sector.
Sarna also indicated to a gathering of business representatives that the tax administration will be lenient towards procedural lapses during the transition period. “There could be genuine mistakes. We are not measuring our success by the cases filed by enforcement authorities,” said Sarna, adding that the effort will be to encourage more people to come to the tax net.
“With the kind of (unrestricted) input tax credits being offered, the assessee base will widen,” said the chairperson, adding that the tax authority will not take a hardline approach with respect to enforcement initially. “We would like it to be a complete success. I urge traders to try and settle down (in the new tax regime),” she said.
Navin Kumar, chairman of GSTN, the company that processes GST returns, said that the company was getting up to 50,000 applications a day seeking GST registration. More than 70 lakh indirect tax payers have already migrated to the GST return filing system.
Sarna also said that the authorities are monitoring the supply and price of goods and services to make sure there is no shortage or profiteering.