Not Yet Merge of Two Slabs But More GST Cess on Cars May Be Increased

The meeting of the 43rd GST council is scheduled for forthcoming Friday. Various stakeholders from the legislature and executive machinery shall participate in it. In addition, states shall also be represented in this meeting. It is much awaited as it shall deliver much valuable decision that includes but are not limited to.

Merging GST Slabs of 12% & 18% into a Single Rate

As per reports, this decision may be delayed. It has been into consideration for many months. But when taken, it shall have a major influence on the people of the country as there shall be a change in the design of the GST structure. Merged Tax rates shall be between 12% and 18%.

Double-Edged Sword

The effect is synonymous with double edge sword. The new GST rate Grab the information of revised GST slab rates on consumer products in India, Although the GST council finalized the slab rates like 5%, 12%, 18% and 28%. Read also shall be costlier for those individuals who are buying a good or service that falls presently within the purview of a 12% rate presently. Contrarily, the goods and services shall be cheaper for people who are buying a good or service on which 18% GST is applicable. Goods that shall be costlier include processed food, medical-grade oxygen, and medical equipment.

Borrowing Scheme

The meeting shall be expected to discuss whether a borrowing scheme that has been put in place the last fiscal for the purpose of meeting states’ GST compensation requirement needs to be continued this year as well. The last GST Council meeting organized in October 2020 had made an in-principle decision. It was related to extending the GST cess beyond June 2022 to assist in paying for the borrowing that was made in FY21 to compensate states. Earlier, The Council had accepted the borrowing arrangement only for the year FY21. However, Continuing the same decision in the current fiscal year also means that the cess would stay for a longer period.

Medical Supplies of Covid-19

This issue shall be on high priority which is related to adjustment in tax rates for medical supplies “Rate cut on vaccines and on imported oxygen concentrators meant for personal use, clarity on the availability of input tax credit on medical supplies donated by businesses or given to employees for personal use are among the key issues that many expect to receive attention, said Abhishek Jain, tax partner, EY.”

State-Related Issues

Earlier this month, Odisha chief minister Naveen Patnaik had written a letter to Union finance minister Nirmala Sitharaman that seeking GST exemption to covid-19 vaccines and fiscal support to states to fight the pandemic.

Finance Minister of Punjab Manpreet Singh Badal was unhappy with the important rule changes such as restricting input tax credits that were being taken without discussions in the Council. There are some other states that have a long list of grievances.