GST Council Meet Live: Finance Minister Nirmala Sitharaman To Brief Media Shortly
Finance Minister Nirmala Sitharaman is set to chair the 41st Goods and Services Tax Council meeting today at 11 a.m. via video conferencing.
The meeting is likely to be a stormy affair as opposition-ruled states unite to pressure the centre to give them the promised compensation for loss of revenue arising from the implementation of GST. The only agenda up for discussion today is the issue of making up for shortfall in states' revenues, according to a PTI report.
The options being explored are market borrowing, raising cess rate or increasing the number of items for levy of compensation cess. Discussion on correction in inverted duty on certain goods like textiles and footwear is also likely, they said.
The Covid-19 crisis has further compounded states' fiscal problems. In a tweet, Kerala Finance Minister Thomas Isaac said, "The solution to GST embroglio is Central Govt to empower GST Council to borrow for meeting the compensation requirement, if necessary through an ordinance, on the strength of future receipts of an extended levy of compensation cess beyond 5 years by an appropriate notification.”
Ahead of the meeting, chief ministers of opposition-ruled states got together on Wednesday to devise a common strategy on the issue. Congress President Sonia Gandhi set the tone for the GST Council meeting by calling the centre's refusal to reimburse the states as nothing short of betrayal of the people by the Modi government.
Other Items That Are Expected To Be Taken Up By GST Council Later
On Aug. 25, the finance minister said the GST Council will consider lowering the tax rate on two-wheelers as it’s neither a luxury item nor a sin good. It a “good suggestion”, Sitharaman said while responding to a query at an industry interaction.
GST rate on two-wheelers currently stands at 28%.
A GST rate cut could push up demand for two-wheelers ahead of the festive season but will impact the government’s revenue at a time tax mop-up has fallen because of the Covid-19 pandemic and the economy is set to contract for the first time in more than four decades.
However, this is likely to be discussed in a meeting on a later date.
Earlier this month, a Group of Ministers has agreed that states can individually decide to make e-way bills mandatory for the movement of gold within their territory to check tax evasion.
The panel decided that if states want to implement the e-way bill mechanism for gold and precious stones, they can do so for intra-state movement of the commodity.