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No More GST Rate Cuts Possible for Indian Consumers

No More GST Rate Cuts

The MSME’s demand for the GST rate cuts could not be fulfilled by the Government and no decisions could be taken in this context in the forthcoming 30th GST meeting which is supposed to be held on 28th and 29th of this month. This is due to the continuous shortfall in revenue and thus, the Government can’t make any such decision which could further hamper the revenue.

The shortfall is the consequence of the difference between the expected revenue collection and the actual collection made. A state Finance Minister reported that if any decision regarding the rate cutting is taken in the upcoming 30th GST council meeting, it would be regarding the insignificant goods which would not affect the revenue significantly.

Moreover, the Government is burdened by the payment of compensation to the States which are facing the highest shortfall in the revenue collection. The States are also in the favor of stabilization in the Tax collection and did not want any further deduction in Tax till the GST revenue shortfall is not controlled. Though an increase in the revenue collection is expected to be seen in the Festive seasons when there is a significant increase in demand.

Government is making a continuous effort in controlling and cutting off the rates. The large-scale rate cuts on white goods is an example of the same but that led to a fall in the revenues in August. The total shortfall amounted to ₹16,473 crore this year so far with an average monthly collection of ₹96,705 crore. The Central Government has shown the concern regarding the shortfall and thus are reaching to the States which had experienced the shortest collections to get to the reasons behind. In this context, the finance secretary Hasmukh Adhia is touring the States like Uttarakhand, Himachal Pradesh, and Bihar to get to the reasons behind the lesser revenue collections in these States.

Read Also: GST TCS Act Brings Trouble For Apple, Amazon, Google and Other E-commerce Giants

On the contrary, The GST Tax authorities, after the implication of the e-way bill, were expecting monthly GST revenue to toll to ₹1 trillion in 2018-19. But later on, the difference between the actual and the expected collections came into being.

The States like Karnataka, Punjab, Gujarat, Maharashtra received compensation from the Central government in 2017-18. Among these Karnataka has received the highest compensation amount ₹7,535 crore for the revenue shortfall. Now Gujarat and Maharashtra have come out of these losses.

In the FY19 budget speech in March, the Punjab finance minister Manpreet Singh Badal said that during the initial stage of GST implementations the State was not able to release funds for developmental work due to uncertainty around tax receipts. In addition to this, the Former Karnataka chief minister Siddaramaiah said in March that rapid changes in the GST regime and problems in the IT system had affected tax the receipts.

Recommended: Revised GST Rates of White Goods After GST Council Meeting

Abhishek Jain the tax partner at EY India said that any growth in the volume of consumer goods sales followed by the recent tax rate cuts is going to benefit the GST collections in coming months.

Disclaimer:- "All the information given is from credible and authentic resources and has been published after moderation. Any change in detail or information other than fact must be considered a human error. The blog we write is to provide updated information. You can raise any query on matters related to blog content. Also, note that we don’t provide any type of consultancy so we are sorry for being unable to reply to consultancy queries. Also, we do mention that our replies are solely on a practical basis and we advise you to cross verify with professional authorities for a fact check."

Published by Jyoti Kumari (Ex Employee)
Jyoti is an MBA graduate, with a corporate working experience. Passionate for writing, she always works on polishing her writing skills to the extent that can turn a dull environment and dull mind full of excitement and eagerness to know more. View more posts
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