New Delhi
Indian auto component
firms fear that the indirect tax department would slap 28% GST on some
components, instead of 18%, basis a new ruling by the Supreme Court (SC).
Many auto
component and automobile companies approached the Indian government after the
indirect tax department started an inquiry to tax certain components at a
higher rate under the goods and services tax framework (GST).
The companies
fear that the indirect tax department would slap 28% GST on these components
instead of 18%, basis a new ruling by the Supreme Court (SC). The SC ruling
came in a different matter and mentioned that GST rates could differ based on
the “sole and principal” use test.
The GST
framework defines and categorises every item and decides the tax rates
accordingly. Under chapters 86, 87, 88 and 89 of GST, several auto components are listed and defined. They
are currently taxed at 28%. Other components are not defined as they have
multiple uses, apart from being used in cars and bikes. This set of components
are taxed at 18%.
Tax experts say
that basis the new SC ruling, even the components that are taxed at 18% GST,
will be charged a GST of 28%. This would give way to several domestic suppliers
and importers to pay a higher rate of taxes.
Companies are
still paying the old taxes, but the inquiries by the tax department would bring
about disputes and litigations, according to legal experts.
Source – The Economic Times
Image Source: Image by Free stock photos from www.rupixen.com from Pixabay
Also Read:
Comments