New Delhi : The GST Council is expected to correct the inverted duty structure, which taxes inputs at a higher rate than output, in the nation’s biggest indirect tax that has resulted in blocked credits for manufacturers.
The GST rate on mobile phones is proposed to be increased from 12 percent to 18 percent, at par with most of the inputs used for manufacturing phones, a government official told Financekhabar on the condition of anonymity. The proposal will be discussed at the council’s meeting on March 14.
Due to the inverted duty structure, input tax credit, or the credit of taxes paid on input, gets stuck as manufacturers pay higher taxes on raw materials, blocking their working capital.
The council would also consider increasing tax on fabric from 5 percent to 12 percent in sync with man-made filament/spun yarn. GST on footwear costing up to Rs 1,000 is proposed to be increased from 5 percent to 12 percent, the official cited earlier said. These proposals have been suggested by the fitment committee that’s tasked with making changes to GST rates.
