A major union of distributors of consumer goods has urged to reconsider the classification of beverages in the form of “sin” goods and demanded to reduce the taxon bottled water of 18% goods and services before the 56th GST Council meeting next month.
The All India Consumer Products Distributor Federation (AICPDF) stated that the highest rate of 28% with cigarettes and tobacco products has been disregarded as “sin” goods as “sin” goods have been disregarded as “sin” goods. 10–20 range, mainly consumed by groups with lower income. These products are currently being placed in the highest GST slab of 28%, it also attracts 12% compensation cess.
“It is inappropriate and inconsistent to keep them in a single bracket as harmful products such as cigarettes and tobacco. It punishes the ability for the common man, while millions of retail vendors support consumption in an area supporting,” said AICPDF national president Dhayeshil H Patil. The Federation represents over 450,000 distributors and 13 million Kiran Store across the country.
The Federation also said that reducing GST on bottled water from current 18% will ensure availability of safe drinking water to people.
Patil said, “The government should immediately reconsider the 18% GST imposed on the drinking water packed under GST 2.0, as it has inadvertently completed comprehensive tax evasion.”
According to Patil, high tax rate on packed drinking water is encouraging dishonest elements to sell fake products by copying the brands installed without paying GST, which not only causes tax evasion, but also has impure water supply to consumers.
He said, “Many uncontrolled and licensed operators take advantage of high tax rate by selling water without proper billing, often supplies inferior and contaminated water, which is not only a threat to public health, but also reduces organized and compliance businesses,” he said.
The Federation contacted the GST Council with its petition as the apex federal body on indirect taxes related to the next generation GST 2.0 reforms is set to meet on September 3-4 in New Delhi, including rationalization of tax rates. The meeting is expected to abolish 12% and 28% slabs while maintaining a special slab of 40%-5% and 18%-and 40% for luxury and “sin” goods.
The argument of the federation is that with less GST traders on aerated drink and bottled water, it will be good for consumers.
“AicPDF is constantly advocating rationally for GST rates in FMCG [fast moving consumer goods] Patil said that categories, balanced taxation will not only enhance compliance and consumer safety, but will also strengthen the traditional retail ecosystem that completes more than 13 million ray stores across the country, ”said Patil.
The Center has proposed to roll out GST 2.0 with three major reforms – rationalization, structural improvement and ease of living life.
It is expected that tax rate rationalization will merge 99% of the products in 12% slabs (mostly bachelor and FMCG items) with 5% slab, which will reduce their rates significantly. Similarly, 90% items under 28% tax bracket will be adjusted to a bottom of 18%. A final decision on the matter, however, will rest on the GST Council headed by the Union Finance Minister and as a member of the State Finance Ministers. Traditionally, the council’s decisions are unanimous.
It is expected that the rate rationalization exercise may come in the form of a festival of festival in front of Diwali. On August 15, Prime Minister Narendra Modi underlined the importance of the next generation reforms under GST, which will bring relief to the common man, middle class, farmers and subtle, small and medium enterprises.
Last week, under the chairmanship of Bihar Deputy Chief Minister Emperor Chaudhary, a group of ministers on rationalization gave the principle to the Central Government’s proposal to reduce the number of GST slabs from four to two, although some ministers expressed concern over revenue implications and demanded in ways in which states could be compensated.
