47th GST council
- The GST Council, chaired by Union Finance Minister and comprising state finance ministers,
- In the 47th meeting here approved the interim report of the GoM on rate rationalisation, headed by Karnataka Chief Minister Basavaraj Bommai.
What has happened?
- Goods and services – ranging from pre-packed unbranded
- food items, certain pickles and lassi, cheques, cut and polished diamonds, LED lamps, pencil sharpeners, printing, drawing and writing ink, cutlery, and hospital rooms – Will face higher GST from July 18, pushing up costs.
- Several items, including services provided by financial regulators and hotel rooms below Rs 1,000 and non-ICU hospital rooms that cost more than Rs 5,000 a day per patient, which are currently exempted from the tax will also be included in the tax net,
- As the Centre and the states seek to bolster their collections and plug leakages ahead of the fifth anniversary of the rollout of the tax reform measure.
- At the same time, there is some relief for certain services, such as ropeways and goods carriage through rented trucks as well as implants and intraocular lenses.
- No opposition to change in rates at GST meet: At its two-day meeting that concluded on Wednesday, the GST Council, headed by Union FM Nirmala Sitharaman with state FMs as members, decided to end exemptions and correct the inverted duty structure for several items.
- By correcting the inverted duty structure, the panel of ministers is seeking to ensure that intermediaries are not taxed at a higher rate than the final product which was the case in several segments.
What about inflation?
- Amid concerns that an increase in rates for several products and services will add to inflationary pressures, Sitharaman said that the states too had weighed the possible impact.
- “All ministers (in the Council) are aware. They are all looking at the system keeping that in mind. So, decisions taken by the council are not as though they are being taken in isolation.
- Elected representatives who are part of the GST council are fully conscious,” she said.
- The GST Council is looking at ways to augment revenue especially when a host of exemptions and tax cuts have meant that the average rate has dropped to under 12%.
- At the time of the launch of GST 5 years ago, the tax rate at which the Centre and the states would not have been worse off than the previous regime was estimated at 15.5%.
- As per an RBI study, the weighted average tax rate under the Goods and Services Tax (GST) has come down to 11.6 per cent, from 14.4 per cent at the time of the launch.
- Through the steps, including a possible reworking of slabs, the Council is seeking to address this issue so that states can also generate higher taxes.
- About a dozen states on Wednesday pitched for extending by a few years the compensation paid to states for revenue lost from the implementation of the goods and services tax (GST) regime.
- The GST Council, the highest decision-making body of the indirect tax regime, however, did not take any decision at its meeting here.
- A final decision is likely to be taken in the next GST council meeting in the first week of August.
- When a nationwide GST subsumed 17 central and state levies from July 1, 2017, it was decided that states will be compensated for any loss of revenue from the new tax for five years.
- That timeframe is ending on June 30.
- With two years being lost in the pandemic, states have sought an extension of this compensation period by five years.
Q) Which among the following is correct regarding GST Council?
- The vote of Centre has a weightage of one-fourth
- Every decision of GST Council is made by majority of not less than two-third vote.
- 1 only
- 2 only
- Both 1 & 2
- None of the above