GST Council meeting to begin on Tuesday with action-packed agenda

The two-day Goods and Services Tax (GST) Council meeting, which begins on Tuesday in Chandigarh, is likely to be action-packed. Shrimi Choudhary explains the issues that the Council is likely to take up:

Compensation extension

Issue: While the Centre has in-principle agreed to extend the compensation cess until March 2026 for repaying debt, many states are seeking at least two-year extension of the regime citing revenue shortfall. The cess, meant to compensate states for GST-linked loss of revenue, is to end on June 30, 2022.

Expected: The Council is unlikely to consider states’ demand for status quo as official data suggests that revenue shortfall for states has narrowed in FY22.

Rate revision, pruning & exemptions:

Issue: An interim report of a GoM on rate rationalisation, suggesting correction of the inverted duty structure and removal of some items from exempt list, will be tabled. Also the report of the Fitment Committee, which suggested tweaking rates for a handful of items and issuing clarification in case of majority of items, will be discussed.

Expected: The Council will review the GoM report, suggesting higher rates for leather goods, printing ink and LED lights etc, and removing exemptions for mass products. It may defer rate restructuring, including changes in the current GST slabs, for three months as requested by the GoM due to inflation concerns.

GST systems reforms to curb evasion:

Issue: A report by a ministerial panel, suggesting ways and means to minimise tax evasion, will be on the table.

Expected: The Council to review the report that recommends tightening of registration process in the case of high-risk taxpayer, use of geo-tagging and physical verification.

Online gaming & e-way Bill on gold movement

Issue: Argument over distinction between online skill gaming and gambling.

Expected: A GoM report suggests imposing a flat 28 per cent on online gaming at par with gambling and betting. The Council to clarify on tax treatment with respect to valuation.

ALSO READ: Quicker refunds helping exporters in GST regime

E-way bill on gold:

Issue: Currently, e-way bills are compulsory for inter-state movements of consignments valued over Rs 50,000, except gold. This exemption leads to tax evasion.

Expected: The Council to take suggestions of a ministerial panel suggesting a minimum threshold value of Rs 2 lakh for generating such e-way bills, leaving it to states to take a call.

Easing compliance:

Issue: Due to disruption caused by Covid, industry sought certain relaxation in compliance for taxpayers.

Expected: The Council likely to waive the requirement for filing refund claims and may also extend the timeline for certain return filing without late fees.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor