Page 41 - GSTL_23rd April 2020_Vol 35_Part 4

2020 ] NEWS DESK J69
In the medium or long run, there is merit in considering Customs duty
rationalisation for critical components and intermediate inputs going into the
production of medical equipment in India. The focus could be on such critical
components that are not made in India but are vital for the industry.
On the Goods and Services Tax (GST) side, any change has its pros and
cons. Any rationalisation needs to be considered while balancing the conflicting
need for promoting Indian investments in manufacturing. Further, the lowering
of GST rates would not benefit the domestic manufacturer - if it is too low, it will
lead to an inverted duty structure creating blockages while availing of input du-
ty credits leading to demands for refunds. Compliance issue would then come to
the forefront.
The other dimension is that any reduction in GST rate immediately hurts
State Revenues which are already under stress. Keeping all this in view, the GST
rate rationalisation on medical devices must be taken up as part of a comprehen-
sive rate rationalisation exercise. Perhaps at that time we could think of one uni-
form GST rate for all medical devices. Today the industry is bedeviled with a
multiplicity of rates - 5 per cent, 12 per cent and 18 per cent. The GST rates must
also be pegged at a level where there are no blockages of input duty credit
through an inverted duty structure. Perhaps we could have a rate of 10 per cent
if the 5 per cent and 12 per cent GST slab are merged at some point in time.
The nub of the argument is that the GST rate rationalisation has to be an
instrument for a medium-term strategy not a short-term response. There is too
much at stake for it to be used for resolving the Covid-19 crisis. The Customs
duty changes have already adequately addressed that.
In conclusion, when the dust settles, let us strategise on how we can use
the GST rate regime to build up a strong domestic industry in sectors like phar-
maceuticals, medical devices and consumer electronics which can play to our
strengths of scientific competence and labour-intensive production. Further to
the rate rationalisation, schemes incentivising and promoting production in India
should also be considered.
[Source : Business Standard, New Delhi, dated 23-4-2020]

Change in ownership status of GSTN to 100% Government-
owned delayed
The transition of Goods and Services Tax Network (GSTN) to a Govern-
ment-owned entity could face a delay as some States remain lukewarm to pur-
chasing shares owing to the additional expenditure on account of Covid-19.
The GST Council had approved the change in ownership in its last meet-
ing held on March 14.
While the changeover was to take effect from April 1, some States have
yet to buy shares of the company as they have refocused their resources to fight
the spread of Coronavirus, said people aware of the matter.
“The proposal to make GSTN a fully Government-owned company from
April 1 was approved in the 39th GST Council meeting. Five-six States that were
yet to buy shares by March 14 were supposed to have taken their shares by
March 31, but they haven’t bought them till date,” said a Senior Government of-
ficial, who did not wish to be identified.
GST LAW TIMES  23rd April 2020  161