From the Editor’s Desk: June 2017

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Dear Readers

As the date for the implementation of Goods & Service Tax (GST) nears, the entire nation of 1.3B people awaits the change which is touted to be the biggest business reform of independent India. For the first time business owners will experience the free movement of goods across state borders, as check posts shall be dismantled on the midnight of 30th June 2017 and “One Nation, One Tax” regime sets in with the ushering of the GST.

The fire and security industry would have been happier if the proposed rate of tax on these goods had not been clubbed with the ‘DeMerit, Luxury and Sin Goods’, which is the terminology that the government itself has collectively given to items that fall in the highest tax slab under GST (28%). With any stretch of imagination this classification of life safety goods such as fire alarms, hold-up and panic alarms and fire extinguishers etc is not acceptable to either the industry or to the common man, as it defies logic.

In view of mounting losses due to incidents of fire and burglaries, which add to national wastage, instead of encouraging citizens of India to invest in security and fire technology to safeguard themselves, the government it appears, will soon be penalising them for doing this! Sadly, the anomaly is apparent to everybody, but it escapes the understanding of the “Babu’s” of North Block!

They argue that with the Input Tax Credit the difference in the cost of these equipments will not be much. However, the industry says that this is not the point. The point is, are security and fire goods ‘DeMerit, Luxury and Sin Goods’? If the answer is “No”, then why have they been categorised in the highest tax bracket of 28% along with cigarettes and tobacco?

Before the GST movement set in, the Security and Fire Trade Bodies and Associations had been busy working on a one-to-one basis with state VAT authorities trying to impress upon them to reduce the state VAT on these items as they were life safety products and helped save life and assets and progressive states such as Maharashtra, Karnataka and Telangana etc had even reduced the VAT on items such as CCTV from the previously charged higher slabs of 12.5% and 14.5% to just 5%, in the recent past. The struggle of the industry was ongoing when the GST rates were announced. Now a jump from 5% to 28% in these states would surely be a huge retrograde step. The industry knows that as the GST becomes applicable and the governments (States and Central) start receiving revenue from these items at a higher tax slab, then getting all the state and the central government to agree to start charging less would be a herculean task!

While, the industry has been making its efforts individually and collectively through various associations and chambers of commerce and government ministries, it is heavy weights such as Sh. RK Sinha, a senior leader of the ruling party, a member of parliament and above all, someone who belongs to the security industry itself and therefore understands the subject better than anyone else, who pitched in and is now fighting to get relief for the industry. I am sure that in times to come we may see a softening of the government stance as they see reason and grant some relief for the industry while incentivising the citizens to invest in their safety and security.

Till we meet next month with some good news on this aspect, stay safe and keep others safe.

G B Singh
Group Editor
Email: gbsingh@1stasset.org
Follow me on @EditorGB
Connect with me on Linkedin.com/in/gbsingh9