Budget FY19: Will there be any change in GST?

As the NDA government is presenting its fifth and the last full Union Budget FY19, people are hoping for some relief  in various tax rates.

Budget analysts expect that the Finance Ministry will introduce some changes in Goods and Services Tax (GST).

Hari Menon, co-founder and CEO of BigBasket, said, “We are happy the way GST has been implemented. Players like BigBasket have accrued a lot of benefits.”

“It has brought a definite relief from a key issue faced by the e-commerce segment that of cascading taxes; ensured seamless movement of goods across the country; and brought in efficiency and transparency in the manufacturing sector,” added Menon. 

Menon also said the implementation of GST helped the company in effectively selling unique products of one state at same price across the nation. For most of the products, prices have come down.

Economic Survey 2018, which was tabled in Parliament this week, said, “GST promises to be a buoyant source of future revenues.”

The survey also said, “ The government will also need to stabilise GST implementation to remove uncertainty for exporters, facilitate easier compliance, and expand the tax base.”

The Finance Ministry said that GST could help break fiscal stasis with positive spillovers for macro-economic stability. 

For Budget 2018, Menon said, “ If the rates are lowered further, it would be great. The customers will benefit more. But, beyond GST, I am not expecting any major reforms in this year’s budget from the business side.”

Explaining what changes can be brought under the GST regime in terms of rates, Meena Ganesh, MD & CEO, Portea Medical said, “Critical care equipments like Ventilator, Oxygen Concentrator, BIPAP, CPAP are under 12% GST and 7.5% Customs Duty. Since these are life saving equipments, these should be made tax free.”

“Mobility Assist equipments like wheel chair / walking stick / cruches are under 5-7.5% GST,” Ganesh said. 

Portea Medical said that earlier under VAT life-saving medical equipments were tax-free thus mobility assist equipments should be given tax relief. 

“Spare parts for all medical equipment is being taxed at 28% GST. This is too high and should be taxed at a lower rate as the original equipment,” Ganesh said. 

While Sandipan Mitra, CEO of HungerBox, stated that this Budget should bring relief on the Customs duty on imports and exempt from the applicable taxes and easier regulatory measures.

Mitra said, “This would be a very good step in helping startups to focus more on enabling the digital economy of the country.”

HungerBox explained that they pay 18%  import duty on the IoT device, referred to as  the Vendor Terminal.

Additionally, another 18% GST tax on it (these are the multiple vendor terminals that are placed in the 75+ digital cafeterias we manage for clients). 

Hence, Mitra said, “Import duties could be removed and taxes could ideally be in the low single digits. This will significantly boost our business.”

India Infoline (IIFL) also believes that, the government may give some clarity on GST rates for Real Estate sector in the budget.

In IIFL’s view, industry players are expecting rationalization of the GST rates from the current 12% to 6%. 

Pre-GST, service tax was around 4.5% and VAT 1%, resulting in total tax outgo of 5.5%.

“The reduction in rates would neutralize the impact of GST. Further there are demand related to bringing stamp duty under the ambit of GST,” said IIFL.

Apart from this, many companies are also expecting that, the  government may provide six months relaxation to companies by extending the GST transition tax credit deadline up to June 30, 2018.

Since GST regime's inception in July 2017, the government had given a time period of 180 days to companies for availing the tax credit. The deadline expired on December 27, 2017.