SME Times News Bureau | 15 Sep, 2020
GST rates in the country are unlikely to witness any change during the
pandemic as the Centre and states have agreed not to disturb the
indirect tax structure in wake of the current economic situation where
growth has contracted and industrial activity has come to a standstill.
Government
sources privy to the development said that there would not be any
increase in GST rates at least during the year and even steps taken to
correct the inverted duty structure would be postponed till the time the
economic health of the country improves.
The GST Council, in its
meeting in August, just focused on the mechanism of compensation to
states for revenue forgone due to the switchover to GST. Sources said
even at the last meeting, it was a unified view that any review of GST
rates should not be considered at this juncture. The same view also got
strengthened in the parleys between the Centre and the states while
deciding the compensation mechanism.
"There is no question of
raising GST rates to augment state resources and reduce the burden on
the Centre for GST compensation. We have given options on compensation
to the states and majority of them have favoured borrowings to meet
current compensation needs while settling the amount later by extending
the duration of compensation cess beyond the five year transition
period," said a top government source.
There were suggestions
earlier to raise the rate of compensation cess on various luxury and
demerit goods while also including more goods and services under the
cess levy to augment resources and meet the GST collection shortfall.
Also,
the agenda was to correct inverted duty structure in various categories
by raising the GST rate on final products while keeping inputs at lower
rates. This was done for a few product categories earlier.
The
Centre is right now focused on bringing states on board over its scheme
on GST compensation for current year in wake of sharp rise in
compensation requirement even as GST revenue crashed in the months of
April and May. It has given states two options to states and wants them
to express their choice so that a compensation mechanism can be
implemented.