Budget 2016: Government may end excise exemptions for some grocery items in preparation for GST
NEW DELHI: Your monthly grocery bill could rise after the Budget as the government is considering the elimination of excise duty exemptions for some items and moving up the lowest rate currently applied on many goods to set the stage for the goods & services tax (GST).
Green tea, dairy spreads, yoghurt, cheese, ice-cream, frozen food products, pasta, ready-toeat foods, packaged fruit juices and soya milk could see excise duty kicking in or going up to the standard rate of 12.5%. Many of these products currently attract nil to 6% excise. “A number of exemptions in the excise duty have been sitting for years,” said a government official. “With GST round the corner, it makes sense to take a relook at the existing structure.” He pointed out that a number of exempted items already attract value added tax (VAT) in some states.
The government is expected to give a renewed push to GST in the Budget session by attempting to win the support of Congress for the constitutional amendment Bill that needs to be approved before the new tax can be rolled out.
The government’s deadline for GST is April 1 but it will be difficult to meet this. More than 300 goods are exempted from excise duty while there’s a blanket exemption for manufacturers with a turnover below Rs 1.5 crore. The turnover threshold for levy of VAT in states is Rs 8-10 lakh while that for GST is expected to be Rs 25 lakh.
The list of exempted items under GST will in any case need to be revised substantially so that it only contains essential items. This is key to keeping the GST rate low. “The lower the rate and the more the commodities that are taxed at this lower rate, the higher will be the standard rate just as a matter of arithmetic,” said the panel headed by Chief Economic Adviser Arvind Subramanian to suggest a revenue-neutral rate for GST.
Source:- http: //timesofindia.indiatimes. com/business/india-business/Budget-2016-Government-may-end-excise-exemptions-for-some-grocery-items-in-preparation-for-GST/articleshow/50926114.cms