Billed as one of the biggest economic reforms in India since the country opted for liberalization in 1991, GST has actually turned into an enigma for the customers who have been booking in advances for their chosen goods over the past two months. GST regime set to be enforced on July 1, the customers are still being kept in the dark over the price they would have to pay on delivery by the manufacturers. The manufacturers seem to be deliberately keeping them on the tenterhooks, shying away from enlightening them even on the base prices of the goods over which taxes are levied.
Rashmi Randhawa, a management staffer from Haridwar Industrial Area, has in the first week of May booked a car with Nexa showroom in Roorkee which sells premium cars of Maruti Suzuki. In spite of her insistence on knowing the final price she would have to pay- she says she would apply for loan- the car dealer is saying that things would be made clear only after GST is enforced. “We are aware of the fact that the prices would change. We are ready to pay the taxes in accordance with the upcoming regime. But the problem is that the showroom staffers are not telling me the base price over which taxes are payable. That is something that, I think, is fixed,” rued Randhawa.
Same is the condition with another customer, Deepak Agarwal from Ranipur Mode who was delivered a Baleno car model at a higher price recently. “The price which was quoted at the time of booking was changed at the time of delivery,” said Deepak. When asked, head of Nexa showroom Pankaj Gupta, a partner in the business, said, “I am not sure about the price of the cars since GST price is not clear yet. Once it comes into force we would be in a position to fix the billing amount.”
A sales tax consultant Ranveer Chauhan said while talking to The Pioneer, “I apprehend that the automobile manufacturers would pass the burden to the customers after GST comes into force. Subsequently, the customers would end up paying a high price. Otherwise, the price of small cars is set to come down under the GST regime. The customer is free to move court if the price is not declared at the time of booking. But no one seems ready to take the route.”
Deliberating further on the matter, Ranveer said that in case of the petrol-driven cars, if the existing tax levied on small cars is between 26 per cent and 34 per cent the proposed tax under the GST regime would be the base tax of 28 per cent plus 1 per cent cess. “There is thus a reduction from 34 per cent to 29 per cent. But what I fear is that the manufacturers would spike the base price before the new tax regime is enforced and then conveniently announce the final price,” he said.
The primary benefit of the proposed tax reform to the consumers of India is the reduced volume of taxation as announced the Union finance minister Arun Jaitley. But the manufacturers are choosing to pass their burden to the customers. According to the new tax regime, the customers would pay a single indirect tax which is supposed to be lower than the total of indirect taxes they have been paying under the old tax regime. This is applicable not just to automobile industry but to pharmaceuticals as well. “We cannot increase the price of products immediately, but post- GST, we will have to go for that as we cannot afford to bear the burden alone,” said a financial consultant from Patanjali Group. Patanjali Ayurved ltd has already shot off letters to the Union finance ministry regarding the same.
A former fighter pilot from Indian Air Force Adarsh Bal said, “It is a very complicated tax reform. Two years ago, the Union finance minister assured that GST would bring down the prices. But as things stand now, it seems that the prices of 80 per cent of the goods would soar up in the coming days. Besides, earlier, a business man used to fill three forms, but now he is required to fill 20 forms. This is leaving them utterly confused. The inter-state tax is another ambiguity which needs to be cleared for the convenience of all concerned.”