Imported goods may turn costlier Under GST

Imported goods may turn costlier Under GST

Consumer durable like smart phones that are imported could see a temporary hike in prices as India transitions to the goods and services tax (GST) that’s set to be rolled out from July 1. That’s because the benefit of the special credit transfer scheme has been restricted to manufacturers.

The latest transition rules approved by the GST Council allow full credit for central excise duty paid on goods value more than Rs 25,000 and have a identification number for tracking like chassis number or other. But this is available only for manufactured goods.

Imported goods may coslier in GST

Thus, those selling imported goods will need to claim deemed credit of 60% or 40% of the central GST paid, depending on the tax rate levied on the products.

They will not be able to claim credit of the entire amount of countervailing duty and additional customs duty paid on such imported goods, possibly leading to a sudden spike in prices of transition stock.

This issue will especially impact the electronics and consumer goods industry, where in a number of cases, goods are imported as fully complete mode and ready to resold in India without carrying out any further processes.

“If the intention is to neutralise the impact of existing central taxes paid on transition stock of high­value items, indirect taxes, PwC. “The disparity would mean that consumer electronics, consumer durables and smart phones which are imported would suffer more tax than ones manufactured domestically. The government should surely review this.”

Professionals are seeking clarity on this that how to determine the value of Rs 25,000 per piece — whether it should be maximum retail price, purchase price or any other value.

The council has set up 18 groups to interact with sectors such as telecom, banking and exports and resolve issues in a time ­bound manner for a smooth transition to the new indirect tax regime.

These sectoral working groups consist of senior officers from the Centre and states who examine representations received from trade and industry groups. These sectoral working groups will highlight specific issues for the smooth transition of the respective sector to the GST regime and prepare sector­ specific draft guidance.

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