Finance Minister Nirmala Sitharaman said that the GST Council will clear all pending dues related to GST compensation to states today itself. A total of Rs 16,892 crore for the month of June will be released among 23 states as compensation dues, the minister said at a press conference at the end of the 49th GST Council meeting held in Delhi on Saturday.  

“We have announced today that the entire due on the pending balance of the GST compensation will be cleared as of today…In other words, the entire pending balance of the GST compensation – a total of Rs 16,982 crores for June – will be cleared,” said Sitharaman. 

Sitharaman added that some of the compensation dues, pending for the month of June will be cleared today itself, even as the amount is not available in the compensation cess kitty.

She said that the funds will be released from the consolidated fund of India and recouped later.

Also present at the press conference, revenue secretary Sanjay Malhotra said that once AG certified figures are available another Rs 16,524 crore will be released to six states.

Finance ministers of states and UTs (with legislature) and senior officials of Union Government and states participated in the meeting.

The finance minister said that the GST Council will reduce GST on liquid jaggery, pencil sharpeners, and certain tracking devices.

As per the Goods and Services Tax (Compensation to States) Act 2017, the Centre can charge a cess that will be paid to the states to make up for money lost since July 1, 2017, when the GST was implemented.

The switch to GST led to a major loss of revenue for several states, for which they need to be compensated for five years counting from July 2017.

Here are the revised GST rates:

1. Pencil sharpeners rates have been cut to 12 per cent from 18 percent earlier.

2. Tax trackers GST rates have been reduced to 12 per cent from 18 per cent, but there are terms and conditions. Services provided by courts will be charged at Reverse Change Mechanism (RCM).

3. GST on a type of liquid jaggery, Raab, has been cut to nil from 18% if it is loose. If it is pre-packaged and labelled, the tax rate will be 5%.

4. The minister said the council has deciced to rationalise the late fee on delayed filing of annual returns or GSTR9 for small taxpayers with an annual turnover of up to Rs 20 crore.

5. The Council has accepted two reports from the Group of Ministers (GoM). One of which is the capacity-based taxation on Gutka Pan Masala and chewing tobacco.

6. The other report is on the GST Appellate Tribunals with certain changes in language. The officials said that the modification in language will be made and a draft will be circulated tomorrow with the members.

7. GST exemptions on coal rejects.

8. GST exemptions for services by the National Testing Agency for conducting entrance examinations for admission to educational institutions.

Things that were not discussed

1. Revenue Secretary Sanjay Malhotra said there was no recommendation from the fitment committee about taxation of MUVs at par with SUVs.

2. Sitharaman said the GoM report on online gaming has been submitted but the chair of the GoM, Meghalaya Chief Minister Conrad Sangma, could not attend the meeting due to state elections.

Rates on Rab or liquid jaggery has been cut to nil from 18 percent earlier if sold in loose form. In case it is pre-packaged, the rate has been cut to five percent.Rates on pencil sharpeners has been cut to 12 percent from 18 percent earlier.Rates on tax trackers has been cut to 12 percent from 18 percent but that is subject to conditions. Services provided by courts will be charged at Reverse Change Mechanism (RCM).

A decision has also been taken to rationalise the late fee on delayed filing of annual returns or GSTR9 for small taxpayers with an annual turnover of up to Rs 20 crore.

Two reports from the Group of Ministers (GoM) have also been accepted by the council. One of which is the capacity based taxation on Gutka Pan Masala and chewing tobacco.

The other one is on the GST Appellate Tribunals (GSTATs) with certain changes in language. The modification in language will be made and a draft will be circulated tomorrow with the members. Further clarification will then by included and circulated again with the members as a final draft post the comments.

“We are doing this exercise as there would not be enough time to meet again before the finance bill and we would like to include the constitution of GSTATs as part of the Finance bill, the Finance Minister said.

On GSTATs, the minister also said that the interest of states will not suffer, whether on representation in terms of members, number of benches and the location of the tribunals.

Other Key Takeaways:

Millet-based Products: Discussions did take place but there were certain reservations with respect to the composition of the products. As a result, no decision could be arrived at.Cement: Not on the agendaOn tax treatment of MUVs at par with SUVs: Revenue Secretary Sanjay Malhotra said that officers of the fitment committee could not arrive at any recommendation as the time was short and they still want more discussions to take place.

On Online Gaming

The finance minister also spoke about the GoM report on online gaming and said that the report has been submitted but the chair of the GoM – Meghalaya Chief Minister Conrad Sangma could not attend the meeting due to state elections.

“It is not appropriate to discuss the report without him so we decided to wait