Government strongly believes that demonetization and GST would have an epoch making impact on the economy and people at large
In the backdrop of the expected implementation of Goods and Services Tax (GST) in July, there has been a conscious effort to avoid major changes in the current indirect tax rate structure in the Budget announcements.
While there was a concern that the government could increase the service tax rates to align with the proposed rate structure under GST regime, consumers can heave a sigh of relief that the same continue to remain unchanged at 15%. This is a welcome move and all eyes would now be on the rate structure for services under GST, as to whether the same would be inflationary or not.
On GST, Jaitley has reiterated that the preparation of IT system for GST is on track. With an intention to bring out much-required awareness of the GST regime, there was specific reference of proposed extensive reach out programme to trade and industry for GST which will begin on April 1.
While the Budget was silent on the tax rates on tobacco and tobacco products, cigarettes etc, the Annexure to the Budget Speech clarified that there has been an increase in the excise duty rates for the ‘sin goods’. Cigar, cheroots, cigarillos, paper rolled biris etc would thus be costlier.
To incentivise Make in India, all parts for use in the manufacture of LED light/lamps have been provided a concession in applicable excise duty. Similar waiver has been provided to certain inputs for use in the manufacture of RO membrane element for household type filters.
While a higher duty has been imposed on import of silver medallion and coins, import of Liquefied Natural Gas (LNG) would attract a reduced basic customs duty.
Residential post graduate programmes in management provided by IIMs enjoy service tax exemption. The benefit has now been extended to non-residential programmes conducted by IIMs.
Last but not the least, as expected, the impact and benefits of demonetization was another talking point. Government strongly believes that demonetization and GST would have an epoch making impact on the economy and people at large. It is expected that the surplus liquidity in the banking system will lower borrowing costs and increase the access to credit.
Well!!! Also time to go digital as cashless transactions would be the theme of the future. As India at large awaits the next steps on GST implementation, a special mention of the parting words of the FM which sums up the aspirations of the government and trade at large: “When my aim is right, when my goal is in sight, the winds favour me and I fly”.
Suresh Nair Tax Partner, EY
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