Next GST Council meeting to focus on rationalisation of rate slabs

 









The next GST Council meeting in December will focus on the rationalisation of the multiple rate slabs and ways to raise revenues as the deadline to end compensation to states looms.

The council’s decision would be critical as the legally bound compensation provided by the Centre to the states for revenue shortfall would end in June 2022.

The meeting would review the report of the two Group of Ministers constituted to look into the issue of rate rationalisation and revenue augmentation.

The next meeting is likely to be held after the Winter Session of Parliament scheduled to end on December 23.

North Block officials said the exact date of the meeting will be decided immediately after the report given by the two Group of Ministers constituted during the last council. The panels have been given two months to submit their report.

The GoM on rates, which has held its preliminary meeting last week virtually, would be holding its first structured meeting on November 20 when the issue of multiplicity of rates and complications arising out of the present classification of commodities under slabs will be discussed in detail.

The government has formed a GoM led by Karnataka chief minister Basavaraj S. Bommai. The GoM has been tasked to propose rationalisation of rates and give the report within two months.

The seven-member group includes Bengal’s Amit Mitra, Kerala’s finance minister K.N. Balagopal and GST Council members from Bihar, Rajasthan, Goa, and Uttar Pradesh.

The group would have to suggest immediate changes, as well as come up with a road map for short- and medium-term changes to the GST rate structure. They will review current tax slabs and GST exempt items, identify potential evasion sources and suggest changes in IT systems.

Finance ministry officials said increased formalisation of the economy, rationalisation of tax rates, correction in inverted duty structure and a move towards the revenue neutral rate of 15 per cent would increase the revenue of the states.

The council is also working on developing tools to plug in the revenue gap or loopholes between the state and the Centre for which it had formed another GoM.

The GoM on systems reforms shall identify potential sources of evasion and suggest changes in business processes and IT systems to plug revenue leakage and identify possible use of data analysis, the Centre said.

They said the cess collected from June 2022 to March 2026 will be used to repay the interest and principle on the borrowed sum. The compensation cess levied on automobiles, tobacco products and aerated water, over and above the basic GST rate, was to be tapped to cover the gap between states’ actual revenues and the 14 per cent annual revenue growth for five years they were assured for adopting GST.

Under GST, a four-rate structure that exempts or imposes a low rate of 5 per cent on essential items and a top rate of 28 per cent on cars is levied. The other slabs of tax are 12 per cent and 18 per cent. Besides, a cess is imposed on the highest slab of 28 per cent on luxury, demerit and sin goods.

There have been demands for merging the 12 per cent and 18 per cent slabs as also take out certain items from the exempt category to balance the impact of slab rationalisation on revenue.

There has been a thinking for a long time to bring down the number of rates and one idea was to merge the 12 per cent and 18 per cent rates and prescribe a consolidated rate of 15 per cent. Various other combinations are also under consideration.

“The GoM on rate rationalisation would review the current rate slab structure of GST, including special rates, and recommend rationalisation measures, including a merger of tax rate slabs required for a simpler rate structure in the GST,” the order had said post GST council meeting in Lucknow.

“The GoM on systems reforms shall identify potential sources of evasion and suggest changes in business processes and IT systems to plug revenue leakage; “The GoM on systems reforms shall identify potential sources of evasion and suggest changes in business processes and IT systems to plug revenue leakage; identify possible use of data analysis towards better compliance and revenue augmentation and suggest the use of such data analysis and; identify mechanisms for better co-ordination between central and state tax administration and tax administration of different states; and suggest timelines for changes recommended,” the order said.

Comments

Post a Comment

Popular posts from this blog

Centre appeals against ruling on levy of GST on maintenance charges to resident welfare associations

Image
  The Centre has preferred a writ appeal before the Madras High Court against a single judge's order that flat or villa owners paying more than ₹7,500 a month towards maintenance charges to their residents’ welfare associations must pay Goods and Services Tax (GST) at the rate of 18% only for the amount exceeding ₹7,500 and not for the entire monthly contribution. Justices T.S. Sivagnanam and Sathi Kumar Sukumara Kurup on Wednesday allowed an application filed by the Centre to dispense with production of a certified copy of the judgment passed by Justice Anita Sumanth recently and directed the Registry to list the appeal for admission in the usual course. Justice Sumanth had in July this year quashed an order passed by the Authority for Advance Ruling (AAR) on June 21, 2019 as well as a consequent circular issued by the Department of Revenue under the Union Finance Ministry on July 22, 2019 since both of them had insisted upon collecting GST for entire monthly contribution. The jud...
Read more

Seven key things to know before filing income tax return (ITR) for FY21

Image
  The last date to file income tax return for the financial year 2020-21 has been extended to September 30, 2021. Although there is more than two months left for the deadline to end, it is always recommended to complete the task as soon as possible and not to wait for the last minute. Worth mentioning here is that the income tax department last month launched a new e-filing portal (www.incometax.gov.in) to speed up the processing of tax returns. The I-T department will soon launch a mobile application, having all the features of the new portal. This year taxpayers have to take care of the following changes in the ITR filing process. 1) A new utility named JSON has been launched for filing tax return forms for FY21. At present, only three forms, ITR 1, 2 and 4 have been released. These new forms will import pre-fill data such as personal details, salary income, dividend income, interest income, capital gains and all the information available in Form 26AS. 2) Taxpayers will have the ...
Read more

Income Tax Dept detects ₹350 cr unaccounted cash receipts after raid in Rajkot

Image
  The Income Tax Department carried out a search and seizure operation on a real estate group based in Gujarat's Rajkot and found unaccounted cash receipts in various projects of approximately ₹350 crore, the Finance Ministry said on Friday. The group is among Gujarat’s prominent real estate builders and developers and is actively engaged in real estate, construction and land trading businesses in and around Rajkot. More than 40 premises were covered in the search operation. During the course of operation, many incriminating documents and digital evidences were seized indicating involvement of the group in unaccounted transactions. The IT sleuths found substantial evidence of transactions outside the regular books of accounts, unaccounted cash expenses, cash advances received and interest paid in cash. Evidence of on-money payments in real estate projects-flats, shops and land deals has also been found. Total unaccounted cash receipts in various projects of approximately ₹350 crore...
Read more