The Agro Food Chamber of Commerce and Industry has called for an urgent simplification of the Goods and Services Tax (GST) Act and rules, highlighting the need to prioritize this issue in the upcoming GST Council meeting scheduled for September 7. According to the Chamber, the current GST framework is riddled with complexities, making it difficult even for tax experts to navigate due to the numerous notifications, clarifications, and amendments introduced over the past seven years.
The President of the Agro Food Chamber emphasized the need for clarity in the tax rates applied to different products as a starting point for simplification. He pointed out that GST is currently levied based on the Harmonised System of Nomenclature (HSN) code, an internationally standardized system used to classify traded products, introduced by the World Customs Organisation (WCO).
The HSN code system includes 21 Sections covering all products, divided into 99 Chapters, with 1,244 headings and 5,224 subheadings. The President noted that products falling under different headings and sub-headings are subjected to varying tax rates under GST, leading to confusion and litigation.
As a solution, he proposed that tax rates should be standardized across all products within a single Section of the HSN code. This approach would simplify the GST structure by ensuring that all products under a broad heading are subject to the same tax rate, reducing the potential for disputes and easing compliance for businesses.
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