All eyes will be on the 47th meeting of the Goods and Service Tax (GST) Council this week. GST Council, headed by finance minister Nirmala Sitharaman and comprising representatives of all states and Union Territories, will meet in Chandigarh for a two-day meeting, starting on June 28. From rationalising rates of a handful of items to discussing compensation of states — a host of 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 Rationalisation of Items
GST-council nominated Fitment Comittee has recommended to rationalise GST rates of a few items. The committee proposed a uniform 5 per cent GST rate on prostheses (artificial limbs) and orthopaedic implants (trauma, spine, and arthoplasty implants). Several kind of orthoses such splints, braces, belts and calipers should attract the lowest GST rate of 5 per cent, the committee suggested. GST rates on ostomy appliances (including pouch or flange, stoma adhesive paste, barrier cream, irrigator kit, sleeves, belt, micro-pore tapes) should be reduced to 5 per cent, from 12 per cent at present, the Fitment Committee advised.
All by-products of milling of dal/pulses such as chilka, khanda and churi, etc will attract a GST rate of 5 per cent, the committee mentioned.
There will be no GST on sewage treated water.
GST Council is likely to clarify on the GST rate on lithium-ion batteries. At present, e-vehicles are taxed at 5 per cent while lithium-ion batteries are taxed at 18 per cent.
GST on tetra pack or tetra packaging paper is likely to increase to 18 per cent from the existing 12 per cent.
The GST fitment committee also recommended to correct duty inversion by increasing rate on cut and polished diamonds from 0.25 percent to 1.5 per cent.
Among various services, the ice-cream parlours are likely to be taxed under 18 per cent instead of differential GST rates. Very popular ropeway services is expected to be taxed at 5 per cent against the present charge of 18 per cent.
The committee suggested to maintain status quo in tax rates of over 215 goods and services.
GST on Online Gaming, Casinos
GST Council is expected to consider a proposal of the panel of state finance ministers on levying 28 per cent goods and services tax (GST) on online gaming, casinos and horse racing. The Group of Ministers, headed by Meghalaya chief minister Conrad Sangma, recommended that online gaming should be taxed at full value of the consideration, including contest entry fee paid by the player on participating in the game.
In cases of race courses, the GoM recommended that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers.
In casinos, GoM recommended that the tax would be levied on the full face value of the chips/coins purchased from the casino by a player. There will also be 28 per cent GST on entry/access fees into casinos, which compulsorily includes foods/beverages etc.
At present, services of casinos, horse racing and online gaming attract 18 per cent. The GST Council is likely to decide the method of valuing the services and GST applicable on them.
GST Council Likely to Ease Compliance for the Taxpayers
GST Council is likely to waive the requirement for filing refund claims between March 1, 2020, and February 28, 2022, in view of the disruption caused by the Covid-19 pandemic, CNBC TV-18 reported. It might also allow tax authorities to file appeals against erroneous refunds by not considering the two-year Covid period, according to reports
States’ Compensation on Revenue Loss to Continue?
Apart from rate rationalisation, there is likely to be a discussion on the continuation of compensation for revenue loss. The Opposition-ruled states is expected to push for the compensation in the future. To meet the shortfall in the GST compensation fund, the Centre has borrowed and released to states Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22. Additionally, the Centre has also been releasing regular GST compensation from the fund to meet the shortfall.
During the introduction of GST in 2017, the Centre assured the states to compensate for the loss of any revenue arising on account of the implementation of GST for five years. The states’ protected revenue has been growing at 14 per cent compounded growth, the cess collection did not increase in the same proportion. The Covid-19 pandemic further increased the gap between projected revenue and the actual revenue receipt.
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