Trade body expresses concern over GST rates

Tamil Nadu Chamber of Commerce and Industry has expressed concern over certain provisions of the Goods and Service Tax, particularly regarding the rate fixed for essential food grains sold under brand names and the tax to be paid by the trade and industry for using lorries to transport goods.

While welcoming the introduction of GST, which is scheduled to come into effect from July 1, a statement issued by the chamber on Tuesday urged the GST Council to interact with trade bodies to discuss and sort out these issues.

The chamber has opposed the 5 % tax on food items like rice, wheat, maize, bajra, ragi, maida, atta and besan that are sold under registered brand names and in unit containers.

Arguing that the government should encourage sale of products under brand names, the chamber said that levy of tax would instead encourage businesses to sell products without registered brand names, which would, in turn, lead to non-availability of quality food items to consumers. The chamber, therefore, demanded that tax exemption should not be restricted to sale of unbranded food items. It also expressed its disappointment over continuation of the system of imposing service tax on trade and industry for using lorry transport even in the GST regime.

S. Rethinavelu, senior president, Tamil Nadu Chamber of Commerce and Industry, said that the system was imposed in 2005 when lorry transport organisations resorted to a month-long protest with the demand that they must not be asked to pay service tax. “So, the government shifted the burden on the trade and industry, who are actually the receiver of the services. We had high hopes that this will be discontinued when the progressive GST regime comes into force. However, it turned out to be a disappointment since the tax should still be paid by the receivers of service on ‘reverse charge basis’,” he said.

Importantly, he added that the trade and industry had also been denied the claim of ‘input tax credit’ for this service tax. “This is a double whammy for us. This will certainly lead to escalation of prices of all goods transported through lorries,” he added.

The chamber also expressed concern that for things like food served in hotels, household furniture, solid bricks, fly-ash bricks and hollow blocks, the tax rates were much higher under proposed GST regime than the prevailing tax rates.