Before the 56th meeting of the Goods and Services Tax Council, the Industry body CII aimed early conclusion of the rate rationalisation process in a meeting with Finance Minister Nirmala Sitharaman.
In the additional GST reforms, the industry body recommended considering all petroleum products under GST, relaxations in the ITC to facilitate the working capital problems, and easing the audit procedure.
For discussing the rate rationalisation, simplification, and future of compensation cess, the GST council may meet in June or July.
The report of rate rationalisation of the group of ministers (GoM) will be analysed by the finance minister, who chaired the council, to furnish relief to the people via rate reductions and rejig of the number of slabs. The report of the GoM headed by Bihar deputy chief minister Samrat Chaudhary was submitted in December 2024.
The proposal to lessen the rate of tax on the health and life insurance tax from 18 to 5 per cent is to be placed while retaining the Input tax credit.
Under the GST regime, the addition of petroleum products is a complex problem with advantages and drawbacks. Industry bodies advocate to draw such products under GST to ease the tax system and lessen the costs, state government has concerns for revenue implications. Petroleum products like crude oil, petrol, diesel, natural gas, and aviation turbine fuel stayed outside the ambit of GST.
At present, 4 slabs are there: 5%, 12%, 18%, and 28%. The Central Board of Indirect Taxes & Customs (CBIC) was evaluating the feasibility of the GST slab rejig by merging 12% and 18% to a single rate of 14% or 15%, or 16%, with revenue implications in each case.
GoM upon the compensation cess, headed by the Minister of State for Finance, Pankaj Chaudhary, is aiming towards the future of the compensation cess beyond March 2026.
Till now, the cess is being imposed on luxury and sin goods, but it is being used merely to pay back the loans taken in the COVID times to cover up the loss to states in the guaranteed GST revenues.
The way to retain the revenue from cess in a certain form is been recommended by GoM, and the way it is to be shared between the centre and the states.
