Commodity and Services Tax Board meeting: All attention to price discounts, and the treatment of inverted fees structures

With the presence of the commodity and services tax council (GST) is scheduled to meet later this week, concerns have emerged due to the reflection of duty and entry tax credit in the industry and countries that confirmed that these issues must be fully addressed in favor of rationalizing prices to move to consumers.

“We must see how the inverted duty structure is treated with price discounts. For many elements, the rate can be reduced to 5 % or exempt, we must see how input services are treated because most input services are 18 % tax,” the sources have noticed.

This would lead to an inverted duty structure, as the tax on input services is higher than the final products. Moreover, GST input tax is not available. In such a scenario, it will be difficult for manufacturers to transfer the commodity tax rate discounts and proposed services for the final consumers.

The case has already been marked by the insurance sector, where the proposal is to exempt health insurance policies and health insurance for individuals from commodity and services tax. There are fears that other sectors where there are discounts in medicines and medical devices to FMCG products, can be affected by the same.

According to the sources, these fears were marked by the industry as well as countries in the Ministry of Union Finance. It is expected that there will be more clarity on these cases when the Ministry of Finance and the state officers meet on September 2 to discuss the proposals to rationalize prices by the center.

The Commodity and Services Tax Council, which will meet on September 3 and 4, will take the center’s proposals to rationalize rates under commodity and services tax at two main rates of 5 % and 18 % with a higher rate of 40 % on sin and luxury goods.

However, the Center has emphasized that structural reforms under GST 2.0 will also correct the inverted fees structure to align with “the income and output tax rate so that there is a reduction in the accumulation of tax credit for inputs.”