The Goods and Services Tax (GST) has no doubt brought cheer to the Government, but appears to have filled the aam aadmi with apprehension from day one of its implementation pan-India, as traders have reportedly started charging customers more. While some traders have raised prices by as much as 25 per cent on essential items of daily use, some hotels and restaurants have also hiked their rates.
Despite concerted efforts by the Finance Ministry and other ministries as well, there have been several complaints from the public about jacked-up prices, as against the Government’s promise that prices of essential items would moderate from July 1.
On the one hand, shop owners say they are forced to pass on the hike to consumers due to high inflationary pressure on raw materials, on the other the Government says “all is well” in the GST regime.
Cheering for the new tax regime in the country, the Finance Ministry has already informed the public that roadside eateries and big restaurants as well as kirana shops and departmental stores have started getting acclimatized to the new tax system. However, the Ministry is far from reality as some ‘unusual profiteering’ practices by owners are still taking place in some way or the other.
For instance, if you spend Rs 100 in an eatery, as per Government rules your bill should come to Rs 112 for a non-AC restaurant after including GST of 12 per cent, and Rs 118 for an AC restaurant after paying a GST of 18 per cent. But after July 1, the owners are charging as much as 25 per cent more than the pre-GST rates and you end up paying Rs 115 and Rs 122.50 for non-AC restaurants and AC restaurants respectively (See table).
In such cases, the Government and shop owners remain gainers all through, while consumers end up with a hole in their pockets.
When asked about such incidences, a senior Finance Ministry official told The Pioneer, “We knew much before the implementation of the GST that such teething troubles would be faced by the public after it becomes a reality. We are making all efforts to avoid such grievances. In consultation with States, the GST Council has decided to create GST complaint cells in every State in coordination with the Central Monitoring Committee (CMC) for such inconvenience, if any. Many of them have created such cells so far in their respective States. We hope we will soon fix all problems related to the price rise on pre-GST rates and other issues as well.”
Besides, the Government is also trying to introduce another concept called anti-profiteering rules to check such practices in the future. “Anti-profiteering is a transitional provision and will be a short-lived concept. The rules in this regard are ready and will be implemented soon. The aim is to protect the interest of consumers, and at the same time not harm the industry’s interests,” the official said, adding that efforts should be made in the direction of a streamlined and transparent process to identify malpractice, if any.
However, restaurant owners claimed that they were facing hurdles from the supply chains and due to hoarding of raw materials for which they need to increase the pre-GST rates to protect their profit margins. “After the GST rollout, we are facing shortage of raw materials for making our food items and had to buy them on hiked rates. Hence, we are forced to hike the pre-GST rates to protect our profit margins. There is no option left for us. We appeal to the Government to look into this matter so that customers will avail cheaper prices for their food items,” said a Delhi-based restaurant owner on condition of anonymity.
To make matters worse for the common man on a tight budget, the domestic lPG price has also shot up by Rs 32 per cylinder, the steepest increase in six years, following implementation of the GST.
While petroleum is not under the GST bracket, the Government clarified on July 1 that both domestic and commercial lPG grades will be taxed under the GST. Pre-GST, most States did not tax lPG, while others levied Value Added Tax (VAT) ranging between 2 per cent and 4 per cent.
Post-GST, an lPG cylinder will cost around Rs 12-15 more in States that did not tax the clean fuel. Instead, in States that levied VAT, the increase will depend on the difference between earlier tax and the GST rate. Domestic lPG attracted zero Customs and Excise duty. lPG has been placed in the lowest 5 per cent GST bracket, the other rates in the new indirect tax structure being 12, 18 and 28 per cent.
Earlier, Prime Minister Narendra Modi had said GST showcased the power of Team India, citing how the Centre and States came together to do good for the poor. But, on the contrary, the same poor are being fleeced by small and medium traders in some way or the other.
To facilitate a smooth roll out of the new tax regime, the Government on Tuesday appealed to the industry to pass on the benefit of reduced taxes under the GST to consumers and announced the setting up of a Central Monitoring Committee (CMC) of 15 Secretaries to monitor the price and supply situation.
“Prices have not gone up,” Revenue Secretary Hasmukh Adhia had said following the first meeting of the CMC here headed by the Cabinet Secretary. “I appeal to the industry to help bring down prices, wherever there is a reduction in tax under GST,” he had added.