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GST Council Meeting - Expectations from 43rd GST Council Meet on May 28

gst council meeting43rd GST Council meeting to happen on 28th of May 2021. Finance Minister Nirmala Sitharaman to chair a council meet for the 1st time in 2021 via video conferencing in New Delhi.The Goods and Services Tax (GST) Council will meet for the first time on May 28 at 11 AM after a seven-month break. Many states have complained about the long delay in convening the Council, which was expected to meet at least once a quarter.

The GST Council is expected to address the modalities for borrowings by states to meet shortfalls in tax revenues this fiscal, If there is a need for borrowings by states to meet shortfalls in tax revenues this fiscal.

Read Also: FM Sitharaman replied to Mamata Banerjee demand to Exempt Oxygen Tanks, Covid Medicines

Tax rates on Covid-related medications, oxygen equipment, and vaccines are likely to be a point of contention for states. The long-delayed problem of inverted duty structures, in which output tax rates are lower than input tax rates, is also expected to be discussed at the Council meeting.

A serious discussions would need to take place in order to develop a road map for bringing natural gas under the GST. The Council had decided in principle to include five petroleum products under GST, but the decision was placed on hold due to pushback from various states concerned about losing VAT revenue. The time has come for the government to put natural gas under the GST regime at the very least. This will undoubtedly assist in lowering natural gas prices for both domestic and industrial consumers.

Read Also: GST on Gold – Rate, ITC, E-way bill and exemption

Another area of emphasis should be the correction of inverted duty structures, which is required in industries like fertiliser, steel utensils, solar panels, tractors, tyres, electrical transformers, pharma, cloth, fabric, and railway locomotives, among others. The term "inverted duty" applies to tax rates on commodities that are higher than those on finished goods. In addition to other administrative and regulatory problems, this results in higher input credit claims by products.

The council should also consider lowering the 28% GST rate on two-wheelers to help raise sales that have been impacted by the pandemic. With a rise in rural demand, as evidenced by increased tractor sales, any rate reduction would aid two-wheeler manufacturers in increasing sales through competitive pricing.

Apart from the above, now could be an appropriate time for the Council to begin the process of tax-slab rationalisation. Multiple slabs have long been a point of contention, and now may be the time to consider ways to simplify the GST rates and reduce the number of slabs. This could boost tax administration performance while also broadening the tax base and increasing enforcement, resulting in higher GST collections.

Read Also: GST on COVID Related Items 2021- Rate, ITC, HSN code & exemption

In light of the impending revenue deficit, the controversy over GST payments to states is likely to resurface. The States are in desperate need of funds to cope with the Covid crisis, with most States' health infrastructure under stress and the Centre putting the onus on the States to procure vaccines.  As a result, they are likely to go all out to get the compensation cess released as soon as possible in order to get out of the crisis. It would also be fascinating to see how the Council plans to compensate for the revenue shortfall.

Summary: Common man can expect following from 43rd GST Council meeting- 

1. To consider lowering general rate of interest

2. Lowering the 28% GST rate on two-wheelers

3. Council may come with New GST Amnesty scheme.

4. Relaxation in section 16(4) and 36(4) 

5. Relaxation in Tax liability.

6. Mull extension of compensation period by upto 5 years, beyond July 2022.

7. Seek exemption or rate cut on COVID-19 related supplies.

8. Mull on levy of 12% tax on import of oxygen concentrators for personal use. 

 

The Ministry of Finance acted quickly to announce various relief measures under GST and Customs to make Covid vaccines and medical equipment more available, including a reduction in customs duty on Covid vaccines and related products imported into India, a reduction in GST on oxygen concentrators imported for personal use from 28% to 12%, and a reduction in GST on medical equipment imported for personal use from 28% to 12%.

Read Also: GST Return Due date Calendar from April to June, 2021

Exemption from IGST for oxygen concentrators and other Covid-related medical equipment imported for free distribution in the region, and so on. Earlier, the basic customs duty on the import of all such products was abolished. In addition, the government has relaxed the deadlines for monthly GST enforcement, as it did last year.

The government is also showing support to remove non-tariff obstacles to COVID-19 vaccines. In October 2020, India and South Africa proposed to the WTO's TRIPS Council to temporarily waive the TRIPS agreement's immunity, which allows all signatory countries to adopt domestic laws that guarantee minimum standards of IP protection. The provision of the Doha Declaration, adopted by the WTO in 2001, allowing for the waiver of such security during national emergencies, which facilitate equal, affordable, and universal access to COVID vaccines and medicines, especially for developing countries.

Read Also: ITR, Tax Audit, TDS Return and other compliances due dates extended : Quick Summary

 

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