The group of ministers (GoM) reviewing the products and providers tax (GST) charges will meet just about on Friday to debate the proposed rejig in tax slabs, at the same time as it could search six extra months to finalise its report.
“We have been verbally told that there will be a meeting on Friday. No agenda has been shared so far,” a member of the GoM advised FE.
Sources stated the panel, headed by Karnataka chief minister Basavaraj Bommai, will assessment the record of products and providers exempt beneath GST to develop the tax base and eradicate the breaking of the enter tax credit score (ITC) chain. Besides, it would look into the situations of an inverted obligation construction to appropriate the inverted construction and advocate appropriate charges to eradicate the inverted obligation construction, so far as potential, to minimise situations of refund as a result of inverted obligation construction.
The GoM was arrange in September final yr and was then tasked to submit its report in two months. In December, the group was given additional time until March-end, however it’s but to finalise its suggestions. It final held a gathering in November 2021.
The GoM’s primary mandate is to assessment the present tax slab charges, and advocate modifications as wanted to garner extra assets, because the five-year GST compensation mechanism involves an finish this month.
While a much-awaited complete restructuring of the GST slabs to boost the revenue-neutral charge (RNR), from slightly over 11% now to fifteen.5%, might take some extra time as a result of inflationary issues, the GST Council might think about elevating the GST on on-line gaming from 18% to twenty-eight%, to carry the skill-game tax charge at par with probability video games involving playing and betting, sources stated. The GST Council s prone to meet by end-June.
There are 4 main GST slabs now — 5%, 12%, 18% and 28%. A clutch of demerit items within the 28% bracket additionally attracts cesses, the proceeds of which go to a separate fund meant to compensate states for the income shortfall.
The Bommai-led GoM will think about the merger of tax charge slabs, required for an easier charge construction in GST. Given the slab rejig is a posh train involving, amongst different issues, correction of inverted duties in lots of worth chains, the GoM will possible be given further time, one other supply had stated just lately.
The council needed to drop a plan to hike the GST charges for many textile merchandise within the man-made fibre worth chain from 5% to 12% in late December 2021, to appropriate the inverted obligation construction, amid protests from the business from Gujarat and different states. The GoM will revisit the matter afresh.
Based on the advice of the GoM, the council might finally shift objects beneath the 12% and 18% slabs to a brand new median slab of 15%. The 5% charge could also be changed by a brand new charge, which will likely be 6% or 7%, however the charge tweaking will likely be finished in a way that lastly creates a three-slab construction.
In the meantime, officers are banking on the continuation of the buoyancy in GST collections and anti-evasion measures to slim the possible shortfalls in GST receipts.
Under the GST compensation mechanism, which is constitutionally assured, state governments are assured 14% annual income progress for the primary 5 years after the tax’s July 2017 launch.
Source: www.financialexpress.com”