Karnataka Congress wants GST rates cut on consumer items to boost demand

Bengaluru: Karnataka Pradesh Congress Committee (KPCC) president DK Shivakumar has urged Finance Minister Nirmala Sitharaman to cut GST rates of consumer durables and other FMCG appliances to drive consumer demand.

The Congress leader has listed out a set of demands in a letter to all MPs elected from Karnataka, and urged them to persuade the Finance Minister to give a set of reliefs to help out the MSME sector, and startups which are facing the biggest crisis due to Covid-19. His letter followed interactions with industry bodies.

"Experts have suggested a scheme where GST rates in general are reduced by approximately 50% and then brought back gradually to current level by perhaps the first quarter of next year, it will spur demand, help MSME’s and prevent a further slowdown," he said in his letter.


The KPCC president said the GST Council should consider a complete moratorium on deposit of GST till June 30. "The impetus should be on ensuring MSME’s do not suffer tax implications the minute they restart as their own reserves have depleted over the period of this lockdown."

The MSME units, he said, are staring at massive losses due to a host of new regulations. "All of this has resulted in a working capital crunch because of loss of revenue in the previous months. In case the government cannot freeze payment of GST, the government should look at providing working capital relief to these industries by deferring the liability of paying GST for the next 6 months," he said.

Shivakumar urged the MPs to work towards speedy GST and IT refunds to industries. "With reference to startups, for which Karnataka is a preferred hub, the government should consider allowing them to claim GST refund on account of accumulated GST balance," he said.

The Congress leader wanted GST rates on capital goods as well as services to be cut from the current 18% so that it will help a number of sectors including MSMEs, real estate, hospitality etc, and drive consumption. "The need of the hour is consumption and all decisions should favour that. Further, such high rates of taxation have led to such service transactions to be made in cash which further fuels the black economy."