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India’s GST Council to meet on June 28-29 in Srinagar

The meeting comes days ahead of the five-year anniversary of launch of the indirect tax regime. The GST was launched in July 1, 2017 after decades-long delay.

June 16, 2022 / 04:52 PM IST

India’s GST Council will meet on June 28-29 in Srinagar, the office of Finance Minister Nirmala Sitharaman said on June 16, without sharing any further details.

The meeting comes days ahead of the five-year anniversary of launch of the indirect tax regime. The GST was launched in July 1, 2017 after decades-long delay.

Since the introduction of the consumption-based tax, the GST Council has cut rates on several items, which has lowered the revenue-neutral rate, or the rate at which income to the states and the Centre isn’t eroded in absence of all local taxes, to 11.5 percent from the so-called revenue neutral rate of 15 percent.

After nosediving in the wake of the coronavirus pandemic, India’s monthly GST collections have remained above Rs 1 lakh crore for 11 months in a row, raising hopes that the tax system is settling down with compliance improving.

Meanwhile, a group of ministers, headed by Karnataka Chief Minister Basavaraj Bommai, is expected to discuss the proposal to shift the taxation rate slabs from the current five percent to seven or eight percent, and from 18 percent to 20 percent.

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However, tax experts are of the opinion that any rate hikes at a time of high inflation are unlikely.

The current tax slabs under the GST regime, are five percent, 12 percent, 18 percent and 28 percent. There are also other special slabs of 0.25 percent and three percent. Some items are exempt while others like sin goods attract the so-called GST compensation cess.

With the promised compensation for adoption of GST coming to an end this month, some states have demanded that the compensation be extended. However, the Centre is against such a move.

The imposition of GST compensation cess on certain goods and services has already been extended until March 2026 to make up for the borrowings and arrears of compensation paid to states in the last two financial years.

To get the states on board prior-to the nationwide roll-out of the consumption-based tax that subsumed most state-level levies, the Centre had assured them annual GST revenue growth of 14% for a period of five years to Jun. 30, 2022 with any shortfall being met from the compensation cess fund.
Moneycontrol News
first published: Jun 16, 2022 04:42 pm
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