All eyes are on the 47th meeting of the Goods and Service Tax (GST) Council this week. The GST Council, led by Finance Minister Nirmala Sitharaman and made up of representatives from all states and Union territories, will meet in Chandigarh on June 28 for a two-day meeting. numerous issues will be discussed in the upcoming GST council meeting.
Let’s take a look at the key agendas of the 47th GST Council meeting
GST rate rationalization of items
GST Council-nominated Assembly Committee has recommended rationalizing the GST rates of some articles. The committee proposed a uniform VAT rate of 5 percent on prostheses (artificial limbs) and orthopedic implants (trauma, spine and arthroplasty implants). Different types of orthoses, such as splints, braces, straps and calipers, should attract the lowest VAT rate of 5 percent, the committee suggested. GST rates on ostomy appliances (including pouch or flange, ostomy adhesive paste, barrier cream, irrigation kit, sleeves, belt, micropore tapes) should be reduced to 5 percent, from 12 percent at this time, the assembly committee advised.
All by-products of dal/legume milling such as chilka, khanda and churi, etc. will attract a 5 percent GST rate, the commission said.
There will be no GST on sewage treated water.
GST Council is likely to provide clarity on the GST tariff on lithium-ion batteries. Currently, e-vehicles are taxed at 5 percent, while lithium-ion batteries are taxed at 18 percent.
GST on tetrapack or tetra-wrapping paper is likely to rise to 18 percent from the existing 12 percent.
The GST mounting committee also recommended correcting the tax inversion by increasing the rate on cut and polished diamonds from 0.25 percent to 1.5 percent.
Among the various services, the ice cream parlors will likely be taxed below 18 percent rather than different GST rates. Very popular cable car services are expected to be taxed at 5 percent against the current charge of 18 percent.
The committee proposed to maintain the status quo in tax rates on more than 215 goods and services.
GST on online gaming, casinos
The GST council is expected to consider a proposal from the panel of state finance ministers to impose a 28 percent goods and services tax (GST) on online gaming, casinos and horse racing. The Group of Ministers, led by Meghalaya chief Conrad Sangma, advised that online gaming should be taxed at the full value of the consideration, including the match entry fee paid by the player for participating in the game.
In the case of racing courses, the GoM has recommended levying GST on the full value of bets collected in the totalizers and placed with the bookmakers.
In casinos, GoM advised that the tax should be levied on the full face value of the chips/coins purchased by a player from the casino. There will also be 28 percent GST on entrance/entry fees to casinos, which will include mandatory food/beverages etc.
At the moment, the services of casinos, horse racing and online gaming are attracting 18 percent. The GST Board is likely to decide on the method of valuing the services and the GST that will apply to them.
GST Council likely to facilitate compliance for taxpayers
GST Council is likely to waive the requirement to file refund claims between March 1, 2020 and February 28, 2022, given the disruption caused by the Covid-19 pandemic, CNBC TV-18 reported. It could also enable tax authorities to appeal erroneous refunds by disregarding the two-year Covid period, according to reports
State Compensation for Loss of Income to Continue?
In addition to rate rationalization, there is likely to be some discussion about continuing to compensate for lost revenue. The opposition-ruled states are expected to push for the compensation in the future. To make up for the shortfall in the GST compensation fund, the Center has lent and released to states Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22. In addition, the Center has also released the fund’s regular GST compensation to make up for the shortfall.
During the implementation of GST in 2017, the Center assured states that they will compensate for any loss of revenue resulting from the implementation of GST for five years. States’ protected revenues have grown at a compounding rate of 14 percent, cession collections have not increased in the same proportion. The Covid-19 pandemic has further widened the gap between projected revenues and actual revenues.
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