Move to Raise Current GST Slab will Harm Trade and MSMEs, says Agrofood Chamber

According to the Madurai-based Agrofood Chamber of Commerce and Industry, any move by the government to raise the current minimum GST slab will be a death blow to micro, small, and medium companies (MSMEs) that have been battling for survival in the post-Covid phase.

"According to reports, the Union Finance Ministry is considering raising GST slab rates from 5%, 12%, 18%, and 28% to 8%, 18%, and 28%." In a statement, S Rethinavelu, President of the Agrofood Chamber, said, "This has come as an unpleasant shock to trade and industry and MSMEs."

Encourage Tax Evasion

Most essential commodities have a rate of less than 5%, and everyday products have a rate of less than 12%.

The proposed tax hike would raise the prices of practically all commodities at a time when India is already experiencing record inflation as a result of the Russia-Ukraine crisis.

Increased tax rates will simply encourage people to avoid paying taxes. Honest traders would have a tough time competing against tax evaders, and they may be forced to close their businesses, he said.

The established and proven idea of taxation is to set tax rates well within the margin of error, so encouraging compliance and increasing tax income to the government. Furthermore, given the current inflationary trend, the government can mop up more revenue even without increasing tax rates. 

Request for Simplification

The business community is requesting that the Union Finance Ministry reduce GST rates to 5, 10, and 15 percent, as well as simplify GST enforcement, which has been complicated by the issuance of hundreds of clarifications, circulars, and amendments, making the otherwise progressive taxation system difficult for not only ordinary traders, but also tax officials and consultants.

"We, the trade and industry, pray that the news of higher GST rates remains a rumour, and we implore the Union Finance Ministry not to murder the goose that lays the golden egg," Rethinavelu added.

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