GST rate changes: CBIC clarifies transition, relabelling, refunds, and benefits
The new goods and services tax (GST) rates announced by the GST Council will take effect on September 22.
The GST regime has been simplified to a two-rate structure of 5% and 18% in a bid to boost consumption. However, a special rate of 40% will apply to luxury and sin goods.
The Revenue Department has held meetings with industry chambers to ensure a smooth transition. CNBC-TV18’s Timsy Jaipuria spoke to Sanjay Mangal, Chief Commissioner of Meerut, Central Board of Indirect Taxes & Customs (CBIC), to clear doubts on how businesses will have to adapt to this change.
Q: When it comes to relabelling of MRP, which is recommended by the government, the industry feels there will be a lot of feasibility challenges, especially for widely distributed items. Can an alternative, such as offering discounts or increasing grammage, be explored by the industry?
A: There are two part of this question. First, the stocks which are lying with them as on September 22, and which have the MRP of the pre-GST rate cut period. After September 22, when they sell their products or make supplies, it has to be at the new rate. But as this will be very difficult for products which are already in stock and already in the distribution chain, the Department of Legal Metrology, under Ministry of Consumer Affairs, has allowed the industry to re-label the packages. (In) existing packages, the relabelling (can be done) by putting stickers, reprinting or by any such measure, in addition to the existing MRP.
The new packages will contain the original MRP as well as the new MRP, for more transparency for the customer, who will know that the price has been reduced. This will also allow transition flexibility to the manufacturers, packers or importers.
Now, for the packages which are manufactured after September 22, it is for the manufacturer or the business to decide how they are going to pass on the benefit of the reduced GST. Whether it is by way of rate reduction or increasing the package size or the grammage, it is for the industry to decide based on their commercial considerations.
