GST States Demand to Reduce Exemptions on Commodities; Service Sector Targetted

The tax exemption list which earlier was believed to be small has considerably expanded and particularly towards the service side. To this, states have demanded a reduction in tax exemption, especially in the service sector, with some even supporting the simpler three slab tax structure.

The tax exemption list will be a subject of discussion in the upcoming GST Council meeting The Goods and Services Tax (GST) Council is concerned about meeting revenue targets, as a consequence of which it will start extensively reviewing the GST rate scheduled on 18 December 2019.

There was yet another assembly of central and state government officials speaking on the measures to enhance revenue collection and also reform the GST tax structure to stimulate GST collection while being in-line with the rigid administration.

The final decision remains in the hands of the GST Council of what items could be eliminated from the exemption list and brought under the ambit of GST imposition. Such issues are not new to the panel, says a government official.

The set of services that are consumed by well-to-do individuals in the country are prone to get targetted by the Council. Like why Olive oil and expensive fabrics are still on the 5% GST rate slab Grab the information of revised GST slab rates on consumer products in India, Although GST council finalized the slab rates like 5%, 12%, 18% and 28%? Some states are not voicing in favor of tax rate hike fearing that it will lead to declining consumption while others are consistent on bringing the goods resting on 5% tax slabs to 8% – 10% tax slabs. To be noted: Most of the goods and services lie on 12% and 18% tax rate slabs.

“There is a design flaw in the GST structure….Tax incidence after GST is lower by 25-30% which has shown its impact on the revenues,” says a government official, stressing on the corporate tax rate cut extended as a relief to the companies which in return can be given to the consumers in the form of low prices.

It was on 27 November 2019, that the suggestions from all the states were accepted regarding the aspects of the upcoming GST council meeting Get to know about GST (Goods and Services Tax) council 1st to 37th meeting updates and decisions taken by members. We have covered 1st meeting to last meeting decisions by Council Secretariat.

Declared by FM Nirmala Sitharaman that GST rate simplification is personally looked upon by the panel. She further stated that the discussions with all the states related to the positioning of the goods and services on different GST rate slabs are going well and the government needs to ensure that the basic necessities of the consumers are either tax-exempt or resting on lower tax rate slabs.

False ITC Claims

The obvious slowdown in GST Collections in recent months has bothered the Parliamentary Committee on Finance, in turn, there is a pressure on the government to completely eradicate the cases of false ITC claiming by unscrupulous dealers. Focused on enhancing the revenue collection of the center, the committee is now expecting the government to resolve all the issues leading to a hindrance in achieving the desired GST revenue growth.

GST revenue collection crossed the Rs 1 lakh crore mark after a gap of three months in November, with the revenue growing by 6%to Rs 1.03 lakh crore in the month.