Published On : Fri, May 19th, 2017

CAIT calls goods classification under GST mostly appropriate urge the government to re classify crucial items

The classification of goods under different tax slabs of GST are by and large fitted in the correct basket and it is expected that goods will be cheaper under GST. However, on the other side several items which have been placed under higher category of tax rate will disturb the pricing structure and will pinch the common man-said the Confederation of All India Traders (CAIT) while commenting upon the fitment of goods under different slabs. The CAIT has decided to make an in depth study of the proposed classification and will soon submit a memorandum to Union Finance Minister Arun Jaitley and urge him to re-classify some of the items. The CAIT has suggested that since most of the fitment work has been done by the Government but yet to arrive at consensus, the Government should constitute a Committee of senior Government officials and representative of trade & industry to have a final look.​

On the other hand, the CAIT has called upon the Finance Minister to implement GST from 1st July and the remaining period of nine months till 31st March,2018 may be declared as trial period and except habitual offenders no action is taken against traders for procedural mistakes. Let this period be a learning period and a process of rectification may be carried in order to ensure greater compliance under GST.

CAIT National President B.C.Bhartia and Secretary General Praveen Khandelwal said that a cursory look at the classification of goods under different tax slabs of GST reveals that certain items placed under 28% tax rate category needs to be re-classified under appropriate tax slab from the point of view of MSME and consumers. Pickles, Sauces, Instant mixer and some of the other items pertaing to food processing have been placed under 18% tax slab though these are consumed by large number of people across the Country. Therefore, these and other similar items deserves to be placed under lower tax rate to maintain prices.

Prime Minister has laid greater emphasis on low cost housing but items like Cement, Paint, Marble, Plywood, some of the items of Builders Hardware have been categorised under 28% whereas Iron & Steel is placed under 18% tax slab. Such a scenario will make housing and infrastructure development a costly affair. It is suggested that all such items should be placed under lower tax slab to bring housing under reach of a common man.

They further said that auto spare parts used for repairs of vehicles and maintenance have been placed under the tax slab of 28% which needs a re-consideration. Spare parts are equivalent to raw material which does not have any independent working and as such these should deserve a lower tax slab. Large number of MSME are manufacturing auto spare parts on small scale and to facilitate them, these items may be placed under 5% tax rate category.

At several places the word “brand” has been used . It is assumed that the intention of the Government is to tax Branded items manufactured by major companies at a higher tax rate which is justified but in that case the definition of Branding needs to be re-crafted.