GST Council Meeting: The GST council will convene its 46th meeting chaired by Finance Minister Nirmala Sitharaman on Friday, December 31, the government has said. The meeting will be offline and the government has reportedly asked only two representatives per state to maintain security. The meeting follows protests by several state governments and trade organizations over the impending increase in the GST in textiles and footwear items from 5 percent to 12 percent. During the meeting, the council will discuss, among other things, the report of the panel of state ministers on tariff rationalization.
According to a government notice, all shoes, under Rs 1000, will attract a VAT rate of 12 percent. On the other hand, all ready-to-use textiles, except those made with cotton, will also attract a GST of 12 percent. Previously, these items were sold at a 5 percent GST rate.
Former West Bengal finance minister Amit Mitra has urged the Union’s finance minister to roll back a proposed increase in textile production from 5 percent to 12 percent.
“Modi Govt will commit another BLUNDER on January 1. By raising the GST on textiles, 5% to 12%, 15 MILLION JOBS WILL BE LOST & 1 lakh units WILL CLOSE. Modi ji, CALL A GST COUNCIL NOW AND MAKE THE DECISION BEFORE THE SWORD OF DAMOCLES FALLS ON THE HEADS OF MILLIONS OF COMMON PEOPLE,” Mitra said in a tweet on Dec. 26.
Telangana Industries Minister KT Rama Rao has also urged the Center to withdraw its proposed plan to increase GST rates. The industry has also resisted the five percent tax hike, citing higher compliance costs, especially for the unorganized sector and MSMEs, in addition to making the poor’s clothes more expensive.
Trade groups have demanded a reversal of the Center’s decision, saying the price change will drastically affect the poor. They have said that the new tax change will raise the prices of clothes, causing the poor man to have difficulty buying clothes. According to CNBC, the council could discuss in the meeting the postponement of the increase in GST tariffs on textiles and footwear below Rs 1,000.
“The decision is extremely irrational and will affect the livelihoods of small manufacturers, artisans and other sections,” CAIT, the agency of top traders, said in a letter to the government.
The 46th GST council meeting will be held in Delhi on December 31, an official said, adding that it will be an extension of the pre-budget meeting with the state’s finance ministers on December 30. The Group of Ministers (GoM) on tariff rationalization will report to the Council. The panel assessed items with a reverse tax structure to minimize refunds payout.
In addition, the Fitment Committee, made up of state and Center tax officials, has made many “far-reaching” recommendations to the GoM regarding changes to plates and rates and to remove items from the exemption list. Currently GST is a four-tier plate structure of 5, 12, 18 and 28 percent. Essential items are exempt or taxed at the lowest plate, while luxury and value items draw the highest plate. A tax is levied on luxury at the top of the highest plate. – and valuables.
It has been requested to merge the 12 and 18 percent plates and also to remove certain items from the exempt category to offset the impact of the plate rationalization on revenue.
(with PTI inputs)
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