While industry has been in direct touch with the government to lobby for concessions in the Goods and Services Tax (GST), there is no lobby for the ordinary, tax-paying, and aspirational citizen of India. In most democracies, it is the elected representatives who take up such issues, but middle-class Indians are not relevant to politicians, mainly because we are not an organised vote bank. The consequence is that we are paying more for many things. For several years now, banks, which earn a fat spread on our money (difference between their lending rate and deposit rate paid to us), have begun to fleece us on every service that ought to be covered by the income they earn on our money. This includes cheque-leaves, ATM transactions beyond three, cash deposit charges, debit card fee, SMS fee, minimum average balance and many more.
Now, for want of a lobby, our interest is being neglected when it comes to GST as well. We learn from social media that consumers are being charged anywhere between 18% to 28% GST for repairs of microwaves, refrigerators, washing machines, etc. Since repairs of home appliances are not tax-deductible, the temptation to ditch formal service companies and move to cash payments to informal technicians will be high. A sensible government would have kept GST on repairs at 5%.
Large cooperative housing societies (CHSs) are also up in arms about the 18% GST and the accompanying paper work. Some argue that services to members, by a voluntary committee, cannot be considered a service at all. But this issue has not received much attention, probably because there is no powerful body to represent the cause of affluent middle-class Indians living in CHSs, especially the larger ones. Remember, CHSs with revenue of up to Rs10 lakh (in any financial year) are exempt from service tax; this further divides those affected by GST.
Mumbai activist Kamlakar Shenoy has raised another important issue about how GST affects ordinary people. In a letter to the prime minister, he has pointed out that there should be no distinction between air-conditioned (AC) and non-AC restaurants for levy of GST. Today, AC restaurants have to pay 18% GST, while non-AC ones pay 12%. In fact, GST on fine dining hotels was reduced from 28% to 18%, while this helped five-star hotels, it is still too high for ordinary AC hotels. “Why can’t an ordinary person enjoy AC comfort for 30 minutes while satisfying his hunger without being burdened with a hefty tax?” asks Mr Shenoy. He points out that an AC is hardly a luxury in hot and humid Indian cities. More importantly, Mr Shenoy points out that the government has made no such distinction between AC and non-AC barber shops, hospitals, or those selling shoes, clothes, medicine, gold or anything else. Even ATMs for withdrawing money are invariably air-conditioned. So why this distinction only for eating houses?
We certainly think Mr Shenoy has a point in demanding uniform GST, at least at the lowest end applicable today. Several activists who we spoke to concurred with the view. Tax expert, Nikhil Vadia, says that a uniform 12% rate for all restaurants seems fair, since they get input tax credit and no longer pay the 6% service charge applicable earlier. Also, there is a 5% GST available for small restaurants with a turnover of up to Rs75 lakh in most states—the distinction of AC and non-AC must, however, go.
Dr VG Patel, chairman of the Consumer Education & Research Centre of Ahmedabad, a leading consumer organisation, also agrees that this issue should be pursued at least to the limited point that “AC facilities at any place for any service or business should not be treated as luxury or meant for higher income group and, hence, must not be charged higher GST… on that account.” Incredibly, even business-class tickets in airlines, a true luxury, are taxed at 12% while economy-class tickets attract 5%. Let’s hope the government listens.
price increases effected on aday to day basis can be easily passed on to the masses. Their essential needs viz food, shelter and clothing are made costly through a higher GST so that the net is very wide and the catch is maximum. Health , education and transport needs of average people are having higher GST and are beyond the capacity of many. Where is the welfare and Ache Din . What is the definition of welfare and ache din? GST has become Garib Sabko Tax. It is going to be another najor setback for the Government and if there is no rethinking , the next election will be a tough fight whether opposition is there or not. The Income tax rates, and the policies to tax interest even on the reduced interest rates are affecting the middle class, senior citizens, pensioners and all sorts of persons making them to keep away from banks and encouraging unauthorised money lending and other inforemal activities thereby nullifying even the small gains if any that are claimed by the Government on Demoneitisation. People had great hopes on demonetisation and GST but they are all shattering and the image of the Government Sabka Sath Sabka vikas is fast vanishing. Even now it is not too late for the authorities to act and set right the wrongs. People are with the Government.