India's federal body that governs the rules pertaining to indirect taxation in the country is likely to consider a proposal that may end up fetching about $3.5 billion in revenues for the Modi government.
According to sources in the Indian Ministry of Finance, the federal tax body - Goods and Services Tax (GST) Council - will consider correcting the inverted duty structure in various sectors, such as textile and mobile handsets. An inverted duty structure is when the taxes on finished products are lower than the taxes on the inputs used in manufacturing those products. The next GST Council meeting is scheduled to be held on 14 March.
A Finance Ministry official told Sputnik, “In [the] textile sector, the final product is taxed at 5 percent, while inputs in manufacturing these products are taxed at 12 percent and 18 percent. Similarly, mobile handsets are taxed at 12 percent, while mobile parts and components are taxed at 18 percent. This creates anomalous taxation and leads to loss to the exchequer on account of refund of input tax credit. The Council aims to correct it in the next meeting”.
This is likely to help the government save refunds worth $3.5 billion as per an internal assessment by the Ministry of Finance.
