Unclear GST rules blindside Indian businesses

The tax’s structure is divided into four main rates ranging from 5 to 28 per cent that has hurt sales and risks denting the economic growth and government revenues in the months ahead.

Launched nearly a month ago GST was meant to simplify rules but ambiguous rules under the new multi-rate tax regime have left firms confused on how to price their products.
 
The Goods and Services Tax (GST) was meant to unify the $2 trillion economy and make it easier for companies to transact across state borders. 
 
The tax’s structure is divided into four main rates ranging from 5 to 28 per cent that has hurt sales and risks denting the economic growth and government revenues in the months ahead.
 
The GST has replaced more than a dozen federal and state levies. While teething troubles were expected, the ensuing chaos has some officials worrying about the repercussions for Asia's third-largest economy. 
 
Moreover, the annual growth slowed in the January-March quarter to 6.1 per cent, its weakest pace in over two years. If growth still slows, federal finances would face problems.  
 
A big test will come in September, when a grace period on filing complete monthly GST returns ends. New Delhi has launched an active outreach programme to educate companies and explain different provisions of the new tax regime. 
 
However, tobacco firms such as ITC Ltd were blindsided by further rule changes after the GST went into effect. These firms lost more than $7 billion in stock market value last week after the government suddenly hiked cigarette taxes. 
 
(Source: Agency) 

Event date: 
Friday, July 28, 2017

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