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Consumer Guidance Seminar on Goods and Services Tax (GST) - Part 1

Mon, 11/12/2017 - 09:19

On September 9th, 2017, Citizen consumer and civic Action Group (CAG), in association with the Consumers Association of India (CAI), organized a Consumer Guidance Seminar on the Goods and Services Tax (GST) at the Anna Institute of Management, Greenways Road, Chennai. Mr. Rajeev Kumar, Additional Commissioner, GST Commissionerate-North, presided over the seminar. Participants attended from different organisations and associations of Tamil Nadu. The seminar was well received by the audience and was well-reported by media. (See https://www.facebook.com/pg/CAGChennai/posts/).

This seminar’s YouTube videos are at https://www.youtube.com/watch?v=HHprAAcNYA0 and https://www.youtube.com/watch?v=1at2EnICx74

In order to better understand consumers' perception about GST, CAG and CAI approached the students of Ethiraj College to carry out a small GST-related perception and awareness survey in and around Chennai. At the beginning of the seminar, students of Ethiraj College shared key facts about GST and presented the results from their survey (Ethiraj-GST-Survey-Findings).

Mr. Rajeev Kumar, Additional Commissioner, GST Commissionerate-North delivered the keynote address. He said that GST is a single tax on the supply of goods and services. It will lead to expansion of economic activity in all industries and will aid in the ease of doing business. It's not merely a change in the tax system, but a paradigm shift! Implementing GST is expected to  increase the Gross Domestic Product. GST will remove the cascading effect of multiple taxation. There are teething problems right now. GST rates will change according to consumers’ needs and problems. Overall tax burden on all commodities will come down thereby benefiting consumers.

He said that Prime Minister Narendra Modi has called GST as the “Good and Simple Tax” and it is rightly so. GST is a merger of State taxes and Central taxes. Tax on tax has been eliminated with the advent of GST. He gave an example of a calculation of how GST avoids tax on tax. Ninety percent of the goods are covered within 0%, 5% and 12% GST slabs. Contrary to the fears of the people, only 10% of the goods have become expensive.

Consumers should know that there are only five GST rates: 0%, 5%, 12 %, 18%, and 28%. Both CGST and SGST components must be written on the invoice/bill. He said that his department’s WhatsApp number has been given to CAG. Consumers can report to him if any vendor charges other than the above rates, or if vendor does not display GST charges accurately, or if any vendor charges both MRP and GST. He encouraged consumers to meet him. He said he is available 24 hours a day to address queries. Finally, he said that they have started GST enforcement just now and that his teams are visiting places that charge more than the stipulated amount, and to stop sellers who are exploiting consumers. He requested consumers to contact him directly or through CAG.

Mr. Anton Paiva, Asst. Commissioner, Department of Civil Supplies and Consumer Protection, Government of Tamil Nadu delivered his presentation next. He started with the basics of GST. He said GST is a tax based on consumption. The unique aspect of GST is that it eradicates tax on tax. It ensures cross-utilization of inputs across industry. The taxation system had actually started formally during the king Rajendra Cholan’s era. Tiruvalluvar had also mentioned about tax collection. Even in the Bible history, it is said that Jesus was tested whether people should pay tax or not. Jesus asked a few people which emblem was depicted in a coin that he showed. People replied it was Caesar’s. Jesus had said “Render unto Caesar what was Caesar's, similarly Render to God what was God’s”. Through that, he had advised people then to pay taxes.

Mr. Anton said that paying taxes helps the government to run various benefit schemes for the people - including industry, government and citizens. He said that all facilities were available online through the GST Network (GSTN). Thus, GST ensures full transparency and accountability of the taxation process and also reduces time taken for filing returns and overall processing times. The human interface is considerably reduced leading to corruption-free and speedy process.

Smt. Saroja’s Presentation on GST

Smt. Saroja addressed the audience. She said that in the morning, Ethiraj College students presented various facts about GST, consumers’ understanding of GST, and impact of GST from their survey findings. GST is essentially a tax on consumption of goods and services and was introduced in 2016 as the One hundred and First Amendment Act to the Indian Constitution. It is valid at all levels from the manufacturing stage to the finished product stage. Wherever there is any form of value addition, GST becomes applicable there. Only value addition will be taxed under GST. At the initial procurement of raw materials a tax is added, then some work is done on these raw materials, then next it is bought by a buyer, here again a tax is added and so on till the product reaches the market finally as  a “finished good”.  All other taxes such as Service Tax, Central Excise, VAT, Sales Tax, Luxury Tax, cesses, etc. - all these are absorbed and subsumed under the GST.

There are three types of GST levied:

  1. CGST - by the Central Government
  2. SGST - by the State Government
  3. Integrated GST -  applied for interstate supply of goods and services, and levied and administered by the Central Government.
     

Totally, there are five GST rate slabs/categories: 0%, 5%, 12%, 18% and 28%. A few examples were shown through slides:

  1. 0% - Groceries, meat products, vegetables
  2. 5% - Edible oils, sugar, spices
  3. 12% - Ketchup, sauces, LED, non-AC restaurants
  4. 18% - Soap, sugar confectionery, mineral water, AC restaurants, AC rooms in hospitals
  5. 28% - Cement, cars

A sample invoice was presented for consumers’ understanding carrying groceries items with 0% GST.  A few more details listed below were shown in the interest of consumers.

  • Rice carries 0% GST, while branded rice carries 5% GST.
  • Consumers must note that “branded” means “brand” registered with the competent authority and not just being a “popular” name.
  • Footwear less than Rs. 500/-  falls under 5% . Above Rs. 500/-  is under the 18% category.

Smt. Saroja said that a main issue now is that how can consumers understand all these numerous  categorization and slabs of GST in their daily lives.

Ministry of Consumer Affairs Notification: She next discussed a Notification from the Ministry of Consumer Affairs on GST on unsold commodities on the GST rollout date of July 1, 2017.

  1. 3 months had been given to vendors to implement the recommendations.
  2. Firstly, not many consumers know about this notification itself!
  3. No vendors have actually made any change according to this notification!
  4. No items had been relabelled yet as per GST to show GST revised prices!

Examples of  GST-related complaints

Smt. Saroja highlighted 5-6 real-life GST-related complaints/issues she came across recently.

CASE 1: The issue was that of a consumer who was charged 18% instead of 12% by a Non-AC restaurant. The owners were unresponsive to the consumer first, so he approached CAG. When CAG intervened, the restaurant said their lawyers will sort it out. The consumer said he will go to consumer court which CAG recommended and supported fully.

CASE 2: A case of a complicated grocery bill was shown, where it was not clear where and how the final GST-revised price was arrived at.

CASE 3: A case of a pricing issue in a textiles store was highlighted. The store owner gave GST as the reason for hiking the price of a garment (dhoti) by Rs. 125/- within a span of 1.5 months.

CASE 4: A hotel bill in which a one-litre water bottle was taxed twice.

CASE 5: A provisions store bill in which dummy GST column and rate were added to avoid scrutiny by tax authorities by the frightened shop owner!

CASE 6: A clear grocery shop bill was shown as an example of a bill that states the GST-related information correctly for each item purchased.  She said this makes understanding bills easy for consumers.

Smt. Saroja suggested product labels/packaging should carry the appropriate GST rates so that consumers need not analyse the bill to calculate the applicable GST rates.

GST AND HELMETS

Currently, helmets are taxed under the 18% GST category. Before  GST was rolled out, helmets were exempted from state taxes and were cheaply priced in Tamil Nadu. In the interest of encouraging people to wear helmets and prevent fatal accidents, Smt. Saroja suggested that the GST rate be reduced for helmets.

GST AND SANITARY NAPKINS

Sanitary napkins are charged under 12% GST slab. Currently, 355 million young women are users of this hygiene product and for most of them, the prices were highly unaffordable earlier itself. In the above context, Smt. Saroja questioned whether these items should even be taxed at all.

GST AND RECYCLABLES

  • Waste cardboards, paper and Polyethylene terephthalate (commonly known as PET) plastics are taxed at 12% GST.
  • All other plastics and bottles attract 18% GST.
  • Municipal Solid waste is exempt from GST technically! But recyclables are taxed which ruins the already meagre livelihoods of rag-pickers. This needs to be relaxed. Smt. Saroja requested authorities to consider revising this as GST now essentially discourages recycling!
  • Waste surrounds us everywhere these days. We need to rethink our consumption patterns (such as: do we need cheap sachets that are littered all around - which industry is marketing aggressively for its consumer reach). We need to move on to sustainable lifestyles, considering these heavy environmental costs involved.
     

Smt. Saroja ended her address and invited questions from the audience.

Q & A

  1. Q: More clarity was requested by audience on water bottle charges in hotel bill.

A: No products should be taxed over and above the MRP.  Restaurants come under the concept of “Composite supply” under the Service Category - as both goods and services are available. Only the gross value of all items should be taxed.

  1. Q: A senior lady requested that there should be more clarity on GST for laymen. Both higher income and lowest income categories are somehow managing. Take, for example, LIG and MIG customers in hotels - these groups don't have legal aid and hence are not aware of GST rules.

A: Choice rests with the consumer on what items they choose - branded or unbranded. It is up to the consumer to decide whether they want to pay taxes and get a quality item or purchase unbranded and cheap items. It will take time to increase awareness and sort out these issues.

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