NEW DELHI: The Cabinet Secretariat has called a meeting of key ministries on Monday to sort out problems raised by different industries before GST 2.0 takes effect on September 22.
The auto industry is concerned about how to adjust cess already paid on vehicles that are sitting in dealerships. These cars will be sold only after September 22, when the cess is officially removed. Companies want clarity on how this tax can be refunded or adjusted.
Bicycle, tractor, and fertiliser makers have complained about the “inverted duty structure,” where the tax on raw materials is higher than on the finished product. For example, GST on bicycles has been cut to 5 per cent, but raw materials like steel and plastic are still taxed at 18 per cent. In the tractor industry, some parts are taxed at 5 per cent while others remain at 18 per cent.
Textile companies have also pointed out mismatched rates. Unstitched fabric is taxed at 5 per cent, while stitched clothes above Rs 2,500 are taxed at 18 per cent.
The insurance sector is worried too. Life and health insurance premiums are now exempt from GST, but companies say they may not be able to lower premiums because input tax credits are no longer available.
Last week, the GST Council approved GST 2.0 reforms, moving to a simpler two-slab system of 5 per cent and 18 per cent. A 40 per cent rate will apply only to luxury and sin goods. The new system is designed to cut tax rates on essentials, unblock working capital, and make compliance easier with automated refunds and registration.
All new rates, except for tobacco, will start on September 22.
Nithin Rosh 
Leslie Rajan