Traders and hoteliers who are reluctant to pass on the tax relief under the Goods and Services Tax (GST) regime would have to face stringent government action soon.
In the wake of a spate of complaints about the surge in prices of essentials and hotel food, the Finance Ministry is making an all-out bid to convince them of the tax relief they could avail themselves of under the new system and the need for passing it on to the public.
Products to cost less
After releasing a list of 101 essential commodities whose prices are bound to come down on repealing Value Added Tax, Excise and other taxes, Finance Minister T.M. Thomas Isaac has convened a meeting of hoteliers on Wednesday to apprise them of the benefits of the new system. The prices of about 85% items being sold in the State such as cooking oil, tea, sugar, chicken, toothpaste, soap, bottled drinking water, cotton textiles, air-conditioners, refrigerators, and so on are bound to come down following the migration to the new system. Even the cost of insulin drugs has come down by 1%.
But a section of traders and hoteliers obstinately jack up the prices and refuse to extend the relief they enjoy to the public. It is in this context that the government has decided to crack down on erring traders and eateries.
Finance Department sources told The Hindu here that the exorbitant rates being levied under various premises after the introduction of GST were unjustified. Traders would get input tax credit and it should reach the customers as well.
Hoteliers’ claim
Hoteliers claim that the expenses incurred on labour and other components have not come down and they are not entitled to relief on all goods used for preparing food. The government refuses to buy the argument and says that though labour and such other components may not have come down, the traders are due to get input tax credit for a number of products, including sugar, atta, maida, tea, cooking oil, chicken, water, LPG, rent, and even advertisement and hence could definitely slash the prices. Dr. Isaac would flag the issue at the meeting on Wednesday.
Inspections
The Legal Metrology Department too had started inspecting shops at random to find out whether retail prices had been scaled up on any ground, sources said. Despite Kerala arguing for enforcing the anti-profiteering clause, the Centre has not allegedly acted on the demand. Dr. Isaac had taken up the issue at the GST Council and had also written to the Union Finance Ministry to enforce the anti-profiteering clause. Now, it was for the Centre to act, sources said.
