Blowing Hot, Blowing Cold: Trade Vs State

Even as government argues that ‘one nation, one tax’ works well, India Inc has its doubts

- A Saye Sekhar

That cold drink (soft drinks), cold water (from the refrigera-tor), ice cream, frozen butter, a cool chocolate or even cool air (air-conditioners) would no longer be cool. You need to spend 5-10% more after the advent of the Goods & Service Tax (GST) regime on July 1. The summer release of India’s blockbuster tax regime is really hot.

Consumer appliances such as refrigerators, air-conditioners and TVs; mobile handsets, laptops, are set to turn costlier. The bouquet of financial services (banking, mutual funds and insurance), as also mobile phone bills will levy a higher burden on the common man from July 1, 2017. The GST on gold is yet to be decided.

The GST regime that becomes operational from that day encompasses 1,211 goods and a host of services and comes as a package to the end-customer/consumer/buyer.

Trade bodies have generally welcomed the GST, while cellular operators have been skeptical with the hike in service tax from 15% to 18% (Service tax has generally gone up from 15% to 18%). Even consumer goods manufacturers, especially small appliance makers, too were not comfortable with being placed in the highest tax bracket of 28%.

Not cool: IBA

The Indian Beverages Association (IBA) almost instantly reacted saying it was “extremely disappointed) and the higher GST would have a “negative ripple” effect on the entire distribution channel – from manufacturers to distributors to retail dealers.