The Goods and Services Tax (GST) Council is all set to hold its 37th meeting in Goa on September 20. There are fewer chances that the council will consider a reduction in rates of GST.
However, some industries, including automobile, biscuits and FMCG, are looking forward to getting some relaxation in the current GST rates, owing to the recent drop in the growth. And if the latest updates are to be believed, the GST Council might actually consider lowering the tax rates for these industries. The automobile sector has requested to cut GST on passenger vehicles from the current 28% rate to a lower 18% rate. However, the Council will have to properly consider the possible impacts on the revenue, if and when it decided to reduce the GST rate on these items.
Major Biscuit companies, including Parle and Britannia, has raised the issue of higher GST on their products, requesting a cut in tax rate from current 18% to 12%. In addition, the GST Council, in its upcoming meeting, is also likely to discuss the matter of raising the 5% tax slab to up to 8%. “These proposals will be placed before the council,” said a senior government official.
During last week, when Finance Minister Nirmala Sitharaman questioned about the demand for GST rates reduction on biscuits, she said if State Finance Ministers have understood GST as a reason behind closing down of branded companies, she would like to hear from them.
“After all, the GST Council is not just the Union government. I would want many of the GST related issues discussed as issues that affect the States too and GST related decisions are not unilaterally taken by the Central government. So, I like to hear States Ministers much before all of us together take a call on it,” she had said.
According to a senior official of the Finance Ministry, as of now, no proposal concerning rate reduction on any item put forward for discussion. In terms of revenue, the Finance Ministry is going through a tough phase. The average revenue collection for the current fiscal year is aimed over INR 1 lakh crore which would be sufficient to fulfil the reduced target of revenue collection proposed in the recent budget.
The revised GST collection target which the Finance Minister proposed stands at INR 6.63 lakh crore which was earlier INR 7.61 lakh crore. If it is combined with State GST (SGST), the average monthly collection will calculate around INR 1lakh crore which was suggested INR 1.14 lakh crore (in interim budget data). Reduction in revenue collection target does not mean that the government needs less revenue. Contrastly, there is a need for more funds so that the government can meet the rising expenditure needs and could cover the fiscal deficit.
Review GST Return Filings
According to the prescribed rules, the GST Council meeting has to be organised at least once every three months. For the upcoming Goa meeting, the state government has already been requested, which has been accepted. The topics which are expected to be discussed during the meeting could include review return filings and phased introduction of new return forms. Also, the council could focus on action should be taken against the non-fillers as well, like debarring them from the issuance of e-way bill. Till now, on an average 20 per cent of taxpayers did not file the return by the last date which affects overall revenue collection.
The council meeting has been conducted 36 times and no such situation arouse till now that required voting to conclude any matter. The GST Council has taken 1,064 decisions till its 34th meeting which include 219 decisions from the GST Implementation Council (GIC). As on May 14, around 1,006 decision taken by the GST council has been implemented successfully while only 58 decisions (of which 39 were unique issues) are pending to implement across the country. Percentage-wise, the GST Council has implemented 94.5 per cent of its decision taken, which is in itself a big achievement and all the decisions taken by the regulatory body were unanimous.