CA Pradeep Jain

The GST Council at its meeting on May 18, 19 has evolved a consensus on GST rates for goods and services, leading us closer to July 1 implementation. The underlying objective of rate declaration was clear for some time, which is to maintain the current effective indirect tax burden to control inflation and avoid surprises. The government has kept a large number of items under 18% tax slab. The government categorised 1211 items under various tax slabs.

The products falling under tariff heading chapter 3305 will be charged at maximum rate of 28%. These are cosmetics items and covers hair dyes also. The rate of 28% is correct for such items. But the products like Heena powder and Heena Paste also fall under the same tariff heading. As a consequence of the same, these products will also attract duty @ 28%.

But these products are enjoying exemption under serial no. 134 of the exemption Notification No. 12/2013-CE dated 01.03.2013 under the current regime. Not only this, since no central excise duty was paid by the heena manufacturers due to normal trade practice, the government has recently given retrospective exemption to Heena powder and Henna paste by Notification No. 11/2017-C.E.(N.T.) dated 24.04.2017. This was done by exercise of powers under section 11C of the Central Excise Act, 1944. This retrospective exemption was provided to heena powder and paste cleared from 01.01.2007 to 01.03.2013. Apart from the exemption from levy of central excise duty, the heena products also enjoy exemption from levy of taxes levied by the State Government.

This levy of tax on Heena powder and Paste under GST contradicts the underlying objective of rate fitment i.e. to maintain current effective indirect tax burden under GST. Though Government Officials always gave intimation that there will be curtailment in present exemptions and abatements applied on goods and services but this is a very harsh provision on Heena Manufactures and Traders as their product is very low priced and ultimately paying such large amount of tax under GST will make it difficult to survive under new indirect taxation reform.

Many associations from Sojat city in Rajasthan are gearing up to take up this matter with the Government. We hope that the Government will address to this situation and try to continue the exemption to these small scale manufacturers. This favour will provide immense relief to the manufacturers of heena powder and heena paste.

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  1. vipul Gupta says:

    I am a Henna manufacturer from sojat city (Rajasthan) and i do support single tax rate on ‘Henna’ & Hennabased hair dye, henna cone , Henna paste & Henna Paste. and I personally I don’t take it as a burden on the industry more of that i took it as our contribution in Indian economy because in current scenario Henna production worth multi million Rupees And govt. Also need funds for infra. eco. social & cultural development. And This single gst rate on Henna gives clearity and help govt. to tackel tax evasion.If there is 2 different tax rate on henna and henna based hair dye Most of manufacturer start selling ‘Hair dye’ in the name of Natural henna and can cause some serious damage to industry by creating price competition in the market.

  2. CA Chandravijay Shah says:

    View endorsed. Word used by the Author is misleading and confusing because no Product with the name “HEENA” exists.

    Please edit the word at all places of otherwise an informative Write up.

    1. admin says:

      Sir, Even department has used the same spelling in all its notifications. That’s why Author has also kept the same spelling.

  3. Bankim Master says:

    Once again pointing out, with due respect, that the word is HENNA and not HEENA as spelled so many times in the article.

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December 2020