Indore News: Fear of tax hike, 300-crore garment industry nervous, pharmaceutical industry also disappointed
Indore, NewDuniya Representative Indore News. The GST Council is meeting on Friday after at least seven months. The business world has many expectations before the meeting. The news coming from Delhi seems to be watering down on expectations. It is believed that there will be no tax exemption on medicines nor hand sanitizers. In the GST Council meeting, the background of the demand has been rejected on technical grounds. Meanwhile, there is a possibility of raising the GST rate on readymade garments and shoes (footwear). The readymade garment industry, which is recognized as a big industry in Indore, is nervous about apprehension.
The GST Council maintains a fitment committee. On the tax and slab changes, the fitment committee examines the ground situation and effect and submits its report and recommendation to the GST committee. Decisions are made in Council based on the recommendations of the Fitment Committee. In the Corona era, there was a demand for exemption from GST on all medical devices. According to sources, the fitment committee has temporarily recommended tax relief on the corona test kit with oxygen pulsmeter, oxygen gas and constructor till July, but has termed the proposal of exemption on hand sanitizer with drugs and vaccines impractical. . Similarly, before the meeting, news is coming that to remove impracticality of GST law, it is recommended to increase the readymade garment and footwear tax.
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According to sources, it has been rejected rejecting the demand for tax exemption on hand sanitizer, that the sanitizer is a product of soap category. Soap also cleans. Both products attract a tax of 18 percent. In such a situation, it will not be practical to give tax exemption on the sanitizer. Similarly, tax relief on corona drugs has also been denied. According to Ashwin Lakhotia, President of MP Tax La Bar Association, we are getting information that the fitment committee has recommended that drugs are being taxed at the rate of 12 percent or 5 percent at this time, because the medicines prescribed for the treatment of Korana in the country. Is not and is constantly changing. Seeing this as a technical reason, the demand for reducing tax on medicines is also not being considered. Earlier, the Union Finance Minister has also refused to waive tax on the vaccine citing tax credit complications.
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According to Yashwant Lobhane, president of the Commercial Tax Practitioners’ Association, and Kedar Heda, vice president, the reason for this is the refund. In fact, on the raw material of manufacturing clothes are taxed at the rate of 12 and 18 per cent but on the manufactured product 5 per cent. In such a situation, most businessmen do not have to pay tax in the end. Rather, they are entitled to get credit from the tax paid on the raw materials first. GST indicates a decrease in revenue after the lockdown. In the past, the Council has implemented the 86-B rule that even if the turnover is 50 lakh, it has sufficient tax credit. That is, his entire tax can be adjusted in the credit, yet he has to pay 1 percent tax. In fact, the desire to deposit money in the government treasury may be responsible for increasing the tax on clothes and shoes.
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300 crore industry will be affected
According to MP Akshay Jain, spokesperson of MP Readymade Garment Association, Indore is the stronghold of readymade garment. Till two years ago, the turnover of the industry in Indore itself was around Rs 300 crore. 2200 small-medium units are operating here. In two years of Corona, the industry is suffering. Now if the government increases the tax, then the clothes will be expensive for the consumer. The operation of industries will be difficult. Right now industries should be given relief. Along with food, cloth is also important for the people. If GST is increased on garment to avoid tax credit, it will be wrong. We have also sent an e-mail memo regarding this to the Finance Minister.