GST Council meets Tax tweaks, States’ compensation on cards.

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprised of representatives from all states and UTs, convenes after a six-month hiatus.

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GST Council meets Tax tweaks

During the two-day meeting in Chandigarh starting from Tuesday, the GST Council is expected to change the rates of goods and services tax on a few items. According to people familiar with the matter, the Gujarat assembly election later this year, as well as high inflation, may force the recommendatory body to postpone a plan to raise GST on items of mass consumption.

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprised of representatives from all states and UTs, convenes after a six-month-long break.

GST was introduced in India with effect in July 2017 and states were assured of compensation for the loss of revenue arising from the rollout of the new tax regime for five years, which is ending this month. Sitharaman had reiterated at the 45th GST Council meeting last year that the regime paying compensation to the state will end in June 2022.

The GST Council is expected to have a heated debate over the compensation payout to states, as opposition-ruled states have pushed for its extension beyond the five years.

Points expected to be discussed in the meeting.

  • The Council is expected to address a mechanism for compensating states for revenue loss, tax rate tweaks in some items, and relaxed registration norms for small online suppliers. 
  • It will also clear the way for a 28% tax on online games, casinos, and horse racing.
  • The 47th Council meeting may also consider detailed, item-by-item tax rate rationalisation proposals to correct the inverted duty structures and eliminate unnecessary tax exemptions.
  • The Fitment Committee has proposed a 5% GST rate on all prostheses (artificial limbs) and orthopaedic implants (trauma, spine, and arthroplasty implants). Orthoses (splints, braces, belts, and callipers) have also been proposed in the 5% range.
  • The Council is likely to issue a clarification on GST rates on electric vehicles, stating that EVs, whether fitted with batteries or not, would attract a 5% tax rate.

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