GST will make sure everything is taxed, even exchange of smartphones, vehicles

The government wants to get everything under the tax ambit and now is planning to bring barters and exchanges under the Goods and Services Tax (GST).

So, if the bill gets passed in Rajya Sabha, exchanging smartphones and vehicles with new ones will no more be an advantage.

If barters come under GST, consumers will have to pay tax on the full value.

The government wants to put a clean chain without disruption in payments to ensure tax credit flows seamlessly.

"It would have an impact on consumer electronics and automobile sectors, wherein old items or cars are exchanged with a new product at a reduced price. It would need to be seen how goods under barter or exchange would be valued," Pratik Jain, partner, KPMG India, told ET.

But for this, government will have to mention clear guidelines.

Reportedly, GST will be levied on supply of goods and services as against provision of service, sale or manufacture of goods presently. Supply will include barter, exchange and licences such as those for mining or spectrum.