Indian Sellers Warn Against New GST Slab

The Indian Sellers Collective has urged against introducing a new 35% GST rate on demerit goods like tobacco and aerated beverages, fearing it would disrupt the GST framework and encourage a parallel economy, benefiting Chinese producers and hurting Indian retailers.

The Indian Sellers Collective has issued a strong warning against the adoption of certain GST rate rationalization suggestions ahead of the 55th GST Council meeting. This includes a controversial proposal to introduce a special 35% tax rate on demerit goods such as aerated beverages, cigarettes, and tobacco.

The collective argues that such a move would fundamentally alter India's GST framework, leading to a host of negative outcomes, including compliance issues, and benefiting Chinese producers over domestic ones. They warn that this could lead to detrimental impacts on profit margins for retailers and could fuel a parallel economy.

Furthermore, the collective cautions that small and medium-sized businesses could face compliance challenges and litigation risks, potentially forcing them to revert to a cash-based economy. They emphasize that the GoM's recommendations, if adopted, could drastically harm the traditional Indian retail network, with the illicit market of demerit goods poised to thrive under such a tax regime.

(With inputs from agencies.)