The 47th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and union territories, will continue till June 29. The council meeting is being held after six months. Two reports of the Group of Finance Ministers of the states will also be presented in the GST Council.
1. Compensation given by the Center to the states is a big issue
Opposition ruled states will strongly advocate for continuation of compensation for revenue deficit. On the other hand, the Center would like to stop any such move citing tight fiscal conditions. To meet the shortfall in GST (compensation fund), the center took a loan of Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 and released it to the states. This was done due to the shortfall in cess collection. After the 45th meeting, Union Finance Minister Nirmala Sitharaman had said that the system of paying compensation to the states for shortfall in revenue will end in June next year.
The Goods and Services Tax (GST) was implemented in the country with effect from July 1, 2017 and states were assured compensation for a period of five years against any loss of revenue due to the implementation of GST.
2. Extension of GST
A proposal to levy 28 percent GST on the gross revenue of online gaming, casinos and horse racing is likely to be discussed in the meeting. The report submitted by the Group of Ministers (GoM) headed by Meghalaya Chief Minister Conrad Sangma may be considered in the meeting of the GST Council.
The rates proposed by the Committee of Officers or the Fitment Committee will be considered on the tax rates. The committee has recommended a uniform 5% GST rate on artificial limbs and orthopedic implants. The committee has also recommended reduction of the GST rate on ropeway travel to five percent from the present 18 percent.
3. Demand for rationalization of GST rate slabs
Some states are demanding rationalization of the rate of GST. There are some states like Chhattisgarh which have demanded rationalization of tax rate more than increasing the GST rate. At present there are eight tax slabs – 0%, 1%, 2%, 5%, 12%, 18%, 28% and 28% +cess. There are some states which want only 2-3 tax slabs to be kept. The issue may also arise regarding rationalization of input credit.
4. E-Way Bill and E-Challan
The council will also consider making e-way bill and e-challan mandatory for inter-state movement of gold/precious stones valued at Rs 2 lakh and above. This arrangement will be for companies with an annual turnover of more than Rs 20 crore.
5. Exemption from Registration Norms
Along with this, the GST Council may exempt small businesses from the mandatory registration norms for using the e-commerce platform. Along with this, e-commerce suppliers with a turnover of up to Rs 1.5 crore will be allowed to opt for the composition scheme, which offers lower tax rates and easier compliance.