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GST Council on May 28 to discuss Covid relief
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SME Times News Bureau | 15 May, 2021
The GST Council will meet for the first time this year on May 28, through video conferencing.
The
meeting coming in the backdrop of the fresh and more deadly Covid wave
sweeping the country, is expected to announce a few Covid relief
measures particularly on compliance matters.
It may also announce
a few measures to correct the inverted duty while discuss the
compensation cess dues arising in 2021-22 due to a possible shortfall in
cess collections.
Two other important items including lowering
of GST rates for two wheelers and bringing natural gas into the indirect
tax fold may also be included in the agenda for discussion.
"Smt
@nsitharaman will chair the 43rd GST Council meeting via video
conferencing at 11 AM in New Delhi on 28th May 2021. The meeting will be
attended by MOS Shri @ianuragthakur besides Finance Ministers of States
& UTs and Senior officers from Union Government & States," the
office of the finance minister said in a tweet.
The GST Council
has not met since October last year when the panel of finance ministers
discussed GST compensation and the borrowing formula offered by the
Centre towards compensating states for GST shortfall.
The 43rd
meeting of the council is expected to again discuss the compensation
issue for the current year but sources said it may also take a few steps
to correct inverted duty structure without pursuing any increase in GST
rates or move towards converging GST to a three rate structure.
Sources
said that the council may at the next meeting also take up two other
important items including lowering of GST rates for two wheelers and
bringing natural gas into the indirect tax fold.
A top source in
the finance ministry said that inverted duty correction, GST cut on two
wheelers and inclusion of natural gas into GST fold are on the agenda
and hopefully the council will offer some solution that is in the best
interest of all stakeholders.
Correction of inverted duty
structure, especially in sectors such as fertilizer, steel utensils,
solar modules, tractors, tyres, electrical transformers, pharma,
textile, fabric, railway locomotives among other goods is required.
Inverted
duty refers to tax rates on inputs being higher than those levied on
finished products. This results in higher input credit claims by goods
besides several administrative and compliance issues.
Currently,
while duty on imported tyres is 10 per cent its inputs ie rubber
attracts 20 per cent duty. Similarly, solar modules do not attract any
duty while its components attract 5-10 per cent duty.
Similarly,
the council may also consider lowering of GST rate of 28 per cent on two
wheelers to give a boost to its sales affected during the pandemic.
With a pickup in rural demand, as seen with increased tractor sales, any
cut in rates would help the two wheeler makers to increase sales with
competitive pricing.
The Council has in principle agreed to
include five petroleum products under GST but has so far deferred its
actual inclusion into the indirect as states fear big loss of revenue.
But now, the government is considering bringing natural gas under the
Goods and Services Tax (GST) regime to begin with as it would be
difficult to bring the entire oil and gas sector immediately under it.
Sources
said that natural gas may be included under a three-tier GST structure
where rates would vary depending on the usage. So, while piped natural
gas (PNG) for homes may be kept at a lower rate of 5 per cent,
commercial piped gas may attract the median 18 per cent GST rate and
automobile fuel CNG may be kept in the highest bracket of 28 per cent.
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