The GST Council has accepted the recommendations of a group of ministers (GoM) on correcting the so-called inverted duty structure and pruning the list of exemptions, while giving the panel three more months to decide on rate rationalization measures, officials said on June 29.
When asked whether rate rationalization could happen given the inflation pressures in the economy, Finance Minister Nirmala Sitharaman said that if the rate rationalisation -- if and when it happens – results in an increase, it will be making up for inefficiencies in the value chain.
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The council also considered a report by another group of ministers on taxing online gaming, casinos and horse racing and have given the GoM time until July 15 to firm up its report after speaking to stakeholders.
The apex decision making body of the indirect tax system will meet in the first week of August in Madurai to discuss a limited agenda, the finance minister said.
The council did not take up issue of taxation on crypto assets or petroleum products, she added.
Among the GST Council’s recommendations today were hiking the tax on printing, writing or drawing ink; LED Lamps, lights and fixture, their metal printed circuits board; solar water heater and system and several other goods to correct the inverted duty structure. GST was also raised for works contract for roads, bridges, railways, metro, effluent treatment plant, crematorium; works contract supplied to central and state governments, local authorities for historical monuments, canals, dams, pipelines, plants for water supply, educational institutions, hospitals; and works contract supplied to central and state governments, union territories and local authorities involving predominantly earthwork.
All rate tweaks decided at the two-day meeting will be applicable from July 18.
The other changes recommended by the council are cut in rates on ostomy and orthopedic appliances. The council recommended that the tax on Tetra Pak, cut and polished diamonds be raised. The tax on transport of goods and passengers by ropeways was cut was the renting of truck with cost of fuel included.
The GST Council recommended to revise the scope of exemption to exclude from it prepackaged and pre-labelled retail pack including pre-packed, pre-labelled curd, lassi and butter milk.
The exemption from GST has also been withdrawn for cheques, printed maps, while concessional rates will no longer be applicable for petroleum/coal bed methane and e-waste.
The council also decided that hotel accommodation priced up to Rs 1,000 per day will be taxed at 12 percent and that non-ICU hospital room rent exceeding Rs 5,000 per day will be taxed at five percent without input tax credit.
The council clarified that electric vehicles, whether or not fitted with a battery pack, would be eligible for the concessional GST rate of five percent.
It also gave in-principal approval for relaxation in the provisions for suppliers making supplies through e-commerce operators and allowed the so-called composition taxpayers to make intra-state supply through e-commerce operators.
The GST Council also announced several measures for streamlining compliances, including a proposal for comprehensive changes to form GSTR-3B.
The body decided to constitute a group of ministers to address various concerns raised by the states in relation to constitution of GST Appellate Tribunal and for making recommendations for appropriate amendments in CGST Act.
Meanwhile, a GoM on IT Reforms has recommended that the GSTN put in place the artificial intelligence-based mechanism to verify antecedents of registration applicants and improve risk-based monitoring of their behavior post registration to identify non-compliant tax payers.
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