|
|
|
You can get e-magazine links on WhatsApp. Click here
|
|
|
|
|
|
Medium, small players in F&B sector raise issues about GST’s HSN codes
|
|
Wednesday, 19 July, 2017, 08 : 00 AM [IST]
|
|
Ashwani Maindola, New Delhi
|
Since the government of India introducing the goods and service tax (GST) regime, which has replaced the erstwhile multiple tax system, the medium and small-sized players in the food industry have raised multiple issues related to the applicability of the new tax regime, vis-à-vis the harmonised system of nomenclature (HSN) code system.
According to industry experts, there is a great deal of uncertainty in the application of HSN codes.
S Jindal, president, All India Food Processors’ Association (AIFPA), said, “A mechanism is required to guide the proper fitment of the HSN codes. There is likelihood of disruption in the operation of trade and industry, leading to litigations owing to differences in HSN codes and related variations in taxation. A nodal agency is required to resolve such matters.”
Another issue is related to refunds under GST. He stated that the procedure of refund of GST paid on inputs when the exported product has been placed in the zero per cent slab must be clarified, as there is ample confusion in this regard, and shipments are held up.
Jindal also demanded urgent clarification regarding the procedure for the movement of goods, e-way bills, road permits and GST on freight charges. “The small trade and industry will not be able to comply with the e-way bill system, and therefore, there is a panic that they may be squeezed out of business,” he said.
“The proposed procedure of reverse charges, self invoices and the deposit of tax, and the subsequent credit adjustment of the same, are rather cumbersome and liable to cause errors. This will be a big challenge for the micro-, small and medium-sized enterprises (MSME) sector, and needs to be resolved,” Jindal added.
The sector also asked for clarity about the procedure of exports to Bhutan and Nepal and the refund of input tax. Moreover, it also expected the prices of packaged food products to increase under the new tax regime.
Jindal said, “Since most raw materials of the food industry are in the zero per cent GST slab, the prices of food products placed in the 12 per cent or 18 per cent GST will increase. It is not proper to expect or announce that the prices of food products will decrease under GST.”
“And there are serious apprehensions about anti-profiting provisions, which might be misused for the harassment of trade and industry. The government is requested to be careful in this regard,” he said.
The MSME sector is also worried about the large industry adopting predatory pricing and product dumping in the market. Jindal said, “The sector is already under pressure owing to the high cost of GST compliance with expensive accounting manpower. Some provision is required to ensure that such exploitations can be avoided.”
He added, “Nonetheless, the initiative taken by the government in setting up GST facilitation centres is appreciated. And handholding is required for small trade and industry spread throughout the country, as 99 per cent of the food industry is in the MSME sector.”
Meanwhile, the Confederation of All India Traders (CAIT), the apex body of traders in the country, welcomed the faster adoption of the GST regime among traders.
Calling GST, a first concrete step towards economic democracy to liberalise traders from the clutches of vicious net of multiple taxes and authorities, the trade leaders urged the government to form a GST Coordination Committee at the district level, comprising senior officials and representatives of trade for a smoother transition.
CAIT also suggested that the government hold a post-GST assessment meet with trade and commerce bodies, both at the Central government and the state government levels, to discuss the ground issues and the possible solutions.
There are also issues with Jammu and Kashmir, which is still in process of adopting GST.
Umesh Verma, spokesperson, Puri Oil Mills Limited (promoter of P Mark mustard oil), said, “Jammu and Kashmir is one of our prime markets, where GST is still in the process.”
“Hence, our stocks are stuck in the process for now. For the rest of the places, as an organisation there are no such difficulties, and operations are moving well,” he added.
There is some problem affecting the supply chain, as the small traders and retailers are finding it difficult to adhere to the nuances of the GST.
Verma said, “As an organisation, there are no such difficulties, as we are technically-savvy, and already have relevant infrastructure in place.”
“We have acquired manpower and knowledge in this regard. The problem lies with our traders, who are neither qualified, nor well-versed with the technical aspects,” he added.
“They are finding it difficult to understand and in the process. In this process, the supply chain is getting affected, but we feel that this is just a teething issue,” Verma stated.
|
|
|
|
|
|
|
|
|
|