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Informist, Tuesday, Aug 13, 2024

 

--Govt: GST Council to hold 54th meeting on Sep 9 in Delhi 

 

NEW DELHI – The GST Council will hold its 54th meeting on Sep 9 in the national capital, the council said in a post on X, formerly Twitter.

 

The last meeting of the GST Council was held on Jun 22. According to procedure and conduct of business regulations, the GST Council should meet at least once every three months. 

 

While there are a few issues that are pending with the Council, the agenda is yet to be finalised, Informist had reported on Monday. Typically, the agenda is shared with state finance ministers 7-10 days ahead of the meeting.

 

One of the key pending issues with the Council is the rate rationalisation panel's report. In June, Bihar Deputy Chief Minister Samrat Chaudhary was appointed as the convenor of the rate rationalisation panel of the GST Council. Others on the reconstituted panel include Uttar Pradesh Finance Minister Suresh Kumar Khanna, Goa Transport Minister Mauvin Godinho, and Rajasthan Medical and Health Services Minister Gajendra Singh. 

 

The rate rationalisation panel has two key tasks at hand--looking at lowering the number of goods and services tax rate slabs, and deciding the future of the compensation cess beyond March 2026. 

 

Currently, the GST regime has four tax slabs – 5%, 12%, 18%, and 28%. The Central Board of Indirect Taxes and Customs Chairman Sanjay Agarwal told Informist in a post-Budget interview that merging of tax slabs was very much on the agenda of the rate rationalisation panel, and he "hopes that they will be finalising their report soon".

 

The other issue--the compensation cess--was imposed for a particular reason and would have to be discontinued after March 2026 as per the constitutional mandate, but the Council might take a call if it wants to look at "additional revenue raising measures" to mobilise revenues, Agarwal had said. 

 

When the GST regime was introduced in July 2017, the Centre had promised to protect 14% revenue growth for states for the first five years by levying a cess on some luxury items. The five-year period ended in June 2022. The GST Council in September 2021 approved extending the compensation cess levy till March 2026 to service the loan taken to offset the shortfall in revenue collections. The Centre borrowed 2.69 trln rupees in 2020-21 and 2021-22 and passed it on to states as back-to-back loans when GST collections dwindled during the pandemic. 

 

At its meeting on Oct 7, the GST Council decided to start looking into the matter of the compensation cess in preparation for the discontinuation deadline of March 2026. 

 

On this issue, Revenue Secretary Sanjay Malhotra had told Informist that the government plans to stop levying the compensation cess once outstanding GST-related debts are settled, and in lieu, add a component to the 28% GST rate which is levied on sin goods.

 

"Once the compensation dues have all been cleared, then we will collect it as GST. Compensation cess will be withdrawn, something else will come. As soon as it ends, we will introduce a new GST or increase the 28% GST on those items. There is no proposal to increase the tax incidence," he had said.

 

Malhotra said the GST Council will take a final call on the modalities and the new tax rate for sin goods that are taxed at the highest rate of 28% currently, along with a compensation cess. He said the aim will be to maintain revenue at the current levels for both the Centre and state governments. "The Council will take the final call on what form this extra GST will be levied, and what the distribution system will be with the states. Normal GST is shared with states, but the Council will take the final call."

 

Besides these two important issues, the rate rationalisation panel will also look at correcting inverted duty structures, suggesting tax changes and pruning of the exemption list. The Council may also take up the issue of the Opposition's demand for withdrawal of the 18% GST on health insurance premiums after the Monsoon Session of Parliament saw multiple rounds of protests and debates on the matter. 

 

This issue came to the fore after a letter to Finance Minister Nirmala Sitharaman from Road Transport and Highways Minister Nitin Gadkari was leaked into the public domain that sought withdrawal of GST on insurance premiums. Gadkari wrote that the levy amounts to taxing the uncertainties of life and restricts growth of the sector.

 

Replying to the protests, Sitharaman had suggested the Opposition bring the proposal to the GST Council through state finance ministers. She slammed the Opposition for politicising the issue in Parliament and asked if the members had written to the finance ministers of Opposition-ruled states to withdraw the tax. Sitharaman had also said that the matter was discussed thrice in the GST Council meeting. The council discussed the matter at its 31st meeting, 37th meeting, and 47th meeting.   End

 

Reported by Priyasmita Dutta

Edited by Deepshikha Bhardwaj

 

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