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Saturday, June 13, 2020

Pan masala will be expensive from next month! The government may increase taxes

The 40th meeting of the GST Council raised important issues of tax evasion and revenue growth from Uttar Pradesh. The minister, who attended the meeting from Uttar Pradesh, said there was a need to consider GST on pan masala and brick kilns. It is believed that pan masala may become more expensive from next month. So raising GST on bricks can also be costly.

GST can be levied on the basis of production capacity

Finance Minister Sitaram said the meeting had raised questions about GST on pan masala and brick kilns from Uttar Pradesh. Uttar Pradesh is urging the GST Council to take a decision soon to increase their revenue. He assured that these issues would be discussed at the next meeting of the GST Council. According to sources, Uttar Pradesh has demanded cess at the manufacturing stage only on the basis of production capacity. Note that GST is currently levied on supplies made from the manufacturer.

Suspicion of tax evasion remains, 5 to 18 per cent GST on bricks

Pan masala is currently subject to 28 per cent GST and 60 per cent cess. So 204 per cent cess is imposed on gutkha. Pan masala is sold in small packets or pouches. Most of which are paid in cash. This makes it difficult for the tax authorities to properly assess the supply of pan masala. This increases the risk of tax evasion. So bricks are subject to GST at the rate of 5 or 18 per cent. 5 per cent GST is levied on clay bricks while 18 per cent GST is levied on panels, plates, multicellular or foam glass blocks.

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Rajat Mohan, senior partner, AMRG & Association, said that under the existing GST system, tax was levied on pan masala and brick on the basis of advertisement value. Currently the corona virus has already reduced the revenue of the states. States should levy GST on these items based on production capacity.

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