At its Friday meeting, the Goods and Services Tax (GST) Council did not reduce tax slabs as expected.
As the government attempts a tightrope walk to enhance tax revenues, there is increasing disappointment in trading and business circles.
At its Friday meeting, the Goods and Services Tax (GST) Council did not reduce tax slabs as expected. Also, it didn't announce any steps to simplify the GST annual return filing. Reduction of taxes was expected in certain items related to realty, automobile and hospitality sectors.
But the Council did extend the deadline for filing annual returns, which was the most sought-after demand.
"A complicated procedure with some impractical columns in the annual returns form was causing problems in filing annual returns. This has not been simplified. There is no change in the format of the returns. Tax rates have also not been cut," complained Jayendra Tanna, president of the Federation of All India Vyapar Mandal, a national body for traders.
Sanat Relia, senior vice-president of the Southern Gujarat Hotel and Restaurant Association, had sought from the Council a single rate of 12% for hospitality sector as multiple rates are causing complications.
It was a long-pending demand that GST rate for cement be slashed from 28% slab to 18% slab to reduce overall development costs, said Anuj Puri, chairman of Anarock Property Consultants. But such benefits are not transmitted to the end consumers to the fullest, he added.
"The price of cement actually decreased last year on the back of surplus supply, but there was no visible impact on property prices. While aspiring buyers remain alert for direct benefits announced for the actual process of home buying, such as reduced home loan rates and taxes, they do not track aspects that result in reduced cost of construction," Puri said in a statement.
He also acknowledged that a reduced GST rate on construction materials will cause revenue loss to the government, especially at a time of constrained economic growth.
Revenue collection is not growing as per the expectation of the government. Average monthly GST collection in the fiscal 2018-19 stood at Rs 98,114 crore against a target of over Rs 1 lakh crore. Against this, the central government has set a target of Rs 13.71 trillion (Rs 1.14 lakh crore per month) for 2018-19, which even a section of the government feels is overambitious.
GST revenues stood at Rs 1.13 lakh crore in April 2019, which is the highest-ever monthly GST collection so far. However, it is lower than the average monthly target set for the fiscal 2019-20. The revenue collection decreased in May to Rs 1,00,289 crore.
"The government has focused on prevention of leakage and increase in compliance, which will improve tax collection. As the revenues stabilise, the government can think of reducing tax rates. The focus on e-invoicing is also aimed in this direction," said Abhishek Jain, partner (Tax) at Ernst and Young.
However, Axat Vyas, a member of the core group of National Advocates Action Committee (NAAC) for GST said it would be premature to expect that a new government will take a major decision like reduction in tax rates.
On simplification of annual returns, he said that already 22% of businesses have filed the returns and with the extension of the deadline, close to 80% will file. Those who do not file returns will face penalties, said Vyas.
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