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Informist, Tuesday, May 27, 2025

 

NEW DELHI - Finance Minister Nirmala Sitharaman will likely meet representatives of Confederation of Indian Industry on Tuesday to discuss reforms in goods and services tax regime, three people aware of the development told Informist. "CII will put forth their recommendations on the changes needed to improve GST structure, including streamlining processes of claiming input tax credit," one of the people cited above said. The meeting is likely to be held at 1730 IST, sources said. 

 

Sitharaman is expected to chair the next GST Council meeting in June and may take up the issue of rate rationalisation and simplification of the tax structure, a senior government official had said Friday. The Council, which has the mandate to meet every three months, had last met in December. 

 

According to another person cited above, CII may also put forth recommendations regarding GST rate rationalisation and the future of compensation cess--two key issues on the Council's agenda. 

 

GST rate rationalisation, the most-looked-forward to item, was taken up in the December meeting but no decision was taken as all members were of the view that more details need to be worked out before rate changes can be announced. "Until the rates are decided, it is best to avoid speculation," the finance minister had said after the Council's meeting.

 

Bihar Deputy Chief Minister Samrat Choudhury heads the six-member Group of Ministers, tasked to recommend trimming the list of items exempt from GST, reassessing tax rates, and correcting inverted duty structures. As part of their recommendations, the panel had proposed rate tweaks on 148 items that could likely help the government raise an additional INR 220 billion per year. The proposed changes aimed to raise taxes on luxury and sin goods on the one hand and provide relief on essential items on the other.

 

And this is where the compensation cess panel comes in. The Group of Ministers on compensation cess, headed by Minister of State for Finance Pankaj Chaudhary, which was initially scheduled to submit its report by Dec. 31, was given a six-month extension by the Council in December.

 

The GST cess, which was introduced to compensate states for revenue losses in the initial years of the GST regime, is due to end in March. The cess on certain luxury and sin items such as tobacco items, motor vehicles, expensive motorcycles, caffeinated beverages and aerated drinks was introduced in 2017 to compensate states for the potential revenue losses in the first five years of the new GST regime.

 

Though the collection of GST compensation cess was to be discontinued in June 2022, it was extended till March 2026 to repay the loans taken by the Centre to compensate for the fall in revenue collections during the COVID-19 pandemic.   End

 

Reported by Priyasmita Dutta

Edited by Vandana Hingorani

 

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