Taxation and Duties

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Taxation and Duties

GST and its Potential to Lead Economic Integration of India

The Goods and Services Tax (GST) in India stands as a cornerstone of the nation's taxation framework,
ushering in a new era of simplicity and efficiency. Implemented in July 2017, GST serves as a
comprehensive indirect tax, unifying and replacing a multitude of previous taxes (e.g., Central Excise,
Service tax, VAT, Entry Tax, Octroi, etc.) at both the Central and State levels. This transformative
measure was designed to harmonize the taxation structure and foster a unified marketplace across the
country.

GST has multi-tiered tax slab system based on the type of goods and services, and it is administered by the GST Council, which consists of representatives from the Central as well as the State governments, ensuring collaborative governance and effective implementation nationwide.

GST has benefited the electronics retailers by combining many taxes into one. This makes it simpler to follow the rules, helps things run smoother, and gives a boost to retailing. It is quicker and easier to not
only file taxes, but also improves the retailers’ ability to claim input tax credits, resulting in enhanced cash flow. With GST, selling goods across different states without dealing with lots of different tax rules has definitely been a major advantage for the brands.

While GST promises to address some of the roadblocks that the earlier multiple taxes had created, the integration of GST into the Appliances and Consumer Electronics (ACE) industry has presented its own set of obstacles and complexities. The effect of GST on the ACE industry is somewhat unfavorable with many products being subjected to high tax rates despite being eligible for lower tax slabs. This is particularly concerning because some of the ACE products such as Air Conditioners, Televisions etc. have now shifted from luxury to essential items and are being used even by low-income families. Treating them as luxury goods with high tax rates no longer seems justified. Moreover, increase in tax rate rolls down to the end customers in the form of increased product price, adversely affecting the product’s penetration.

The digital era has propelled the demand for ACE products across demographics and segments of customers and the ever-evolving technological and product innovations are only going to further add to this. GST has surely helped electronic brands in expanding their markets and penetrating new customer base, though the high tax rates on some of the product categories continue to act as a dampener for high demand.

Overall, GST has encouraged formalization, improved supply chain efficiency, and fostered long-term growth prospects for the ACE industry in India. CEAMA, with inputs from its members/ manufacturers has been taking up the matters with the concerned authorities on streamlining the GST rates for the ACE products such as Air Conditioners, Televisions etc.