Consumer Guidance Seminar on Goods and Services Tax (GST) - Part 2

Smt. Umashanti from the GST Commissionerate delivered the GST presentation next. She said GST can solve all the deficiencies of the current system as described below:

1. GST will harmonize tax rates across the country. “One Tax - One Nation - One Market” concept is now possible by GST.
2. Standardization has been made easier by GST through easy automation.
3. All procedures are now clear and the whole process has been streamlined with GST.
4. Tax returns by assessees were earlier of poor quality and accuracy. This has been standardized and improved by GST.
5. There is greater transparency in all financial transactions across the country.
6. Tax evasion will get reduced.
7. Prices will get stabilized and due credits can reach the seller better.

Perceived Benefits of GST

1. A single tax will replace multiple taxes;
2. Cascading effects of taxation has now been removed;
3. More jobs will be created as economic activity is expected to increase;
4. Indian products will be more competitive in the international markets;
5. Gross Domestic Product will grow after GST is implemented; and
6. Common man will be benefited with decreased tax burden on goods and services.

Evolution of GST

1. 2006: First announcement with a plan to introduce the same by 2010;
2. 2009: First discussion paper was presented;
3. 2011: First constitutional amendment for GST was passed, three committees created;
4. 2014: A new GST Constitutional Amendment Bill was passed. States and center resolved compensation issues on states’ revenue losses.
5. 2017: GST finally passed after eleven years in March 2017, implemented nationwide from July 1, 2017.

MORE GST-RELATED FACTS

• GST does not affect any of the taxes levied by local bodies - such as cinemas or municipality taxes, etc., which will continue as before.
• Higher tax collections recorded after GST shows that it has been positively accepted.
• Even backward states have a chance for development with the help of GST.
• Only value addition will be taxed now.
• Various state taxes and central taxes have now been subsumed under GST.
• Tax rates are same across India, hence extra warehousing costs and needs will be reduced.

BENEFITS OF GST

1. Checkposts system has been eliminated. 5 travel days are reduced now.
2. There is just a single national market now.
3. It is a self-regulating system now. Each vendor can supervise another using the automated process flows and checks built in the GST system. Soon, only proper business men will remain in the system. Other fraudulent vendors will get filtered away eventually.
4. Tax that consumer pays is reduced by 4 % at least on the average. A product with production price at Rs. 100/- used to cost Rs. 132/-  after multiple taxes were imposed. Now at 28% GST tax rate, it will cost the consumer only Rs. 128/- creating a 4% price reduction to the consumers.
5. Nearly 81% of goods fall below the 18% GST tax rate category and only 19% of the goods will be taxed above 18%.

Next, Mr. Chakravarthy from the GST commissionerate spoke. He gave a historical background of consumer-oriented legislation in India. He explained how the Consumer Welfare Fund originated. He said that earlier there was profiteering as regards tax refunds being returned to taxpayers. He gave the example of the case of M/s. Mafatlal Industries in the Supreme Court that brought up the issue of “Doctrine of Unjust Enrichment”. This was deemed wrong and this led to the Consumer Welfare Fund in the year 1994 - which was the first ever consumer-oriented tax legislation in india.

Next he explained what the Consumer Welfare Fund was, and what it was used for. This fund is maintained by the Ministry of Consumer Affairs and is the most important fund that consumers and the audience needed to know about. This is meant exclusively for consumers' welfare. For details, he asked the audience to go through the ministry’s  website. He said that people do not read newspapers thoroughly, even though notices from the government regarding consumers welfare were published on newspapers often. He said that consumers need to know all about the Consumer Welfare Fund’s utilization, e.g., for carrying on litigation, compensation for overbilling by a company, etc.

He revealed that a new “GST Rate Finder” smartphone application is available for use on smartphones. This utility gives the correct GST chargeable against any commodity in the market. He showed slides on the anti-profiteering law. He said that consumers can approach authorities if retailers did not pass on the reduction in tax rates to consumers. He said that anti-profiteering check is a unique feature of GST - a feature not available earlier. Consumers and consumer forums should publicise this feature and take advantage of it.

He said that Indian consumers are largely indifferent and do not read bills properly. They are not clear about the meaning of MRP and GST and the relationship  between these two items. He said many shopkeepers themselves don't know what rate they should sell at! The government alone cannot make all these stakeholders knowledgeable on GST. Work done by NGOs such as CAG is useful to inform everyone about these details. He said the Ministry of Consumer Affairs has various FAQs for consumers. He requested the audience to help the government in enforcing GST. He mentioned that proper change management needs to be done to implement GST as with any new change. Any new change is often met with resistance initially. Only awareness can change this resistance, he summarized. GST is the evolved version of MODVAT or CENVAT which were older taxation methods. To get 1 crore tax assesses using GST is the goal of the Prime Minister, he said. He ended his talk by asking all to become aware of all unique features of GST.

Smt. Saroja then spoke about the Consumer Protection Act of 1986 that has been in effect for about 31 years, but even today only 25% of people know about their rights as consumers and about consumer courts, etc. There are many questions that even the aware consumers face - e.g., the long times they have to wait in courts to get justice, etc. People just give up on seeking consumer justice, she said. Thus, there are still many mindset changes and obstacles to be overcome, she said. Similarly, many challenges are present within GST as of now. Only two months have lapsed so consumers’ awareness of GST is low and many teething problems are there and these need to be resolved. Smt. Saroja provided the addresses of two websites that Ms. Uma Shanthi gave for consumers: 
1. http://www.cbec-gst.gov.in (Central Board of Excise and Customs, Ministry of Finance - Department of Revenue)

2. https://ctd.tn.gov.in/home/ (Commercial Taxes Department, Govt. of Tamil Nadu)

She advised all to see the FAQs in the Commercial Taxes Dept. (https://ctd.tn.gov.in/general-faq)
3. Seva Kendras of Commercial Taxes Dept. which are functioning in many places, e.g., Nungambakkam Seva Kendra, Ph: 044-2833-1009.