GST Council meeting to take call on tax rate cut on Friday amid slowdown

Amid clamour for rate cut by various industries, the all-powerful GST Council will hold a crucial meeting on Friday to decide on tax moderation, keeping in mind the revenue position and the need to boost sagging economic growth.

The GST Council, headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and Union Territories (UTs), will have its 37th meeting in Goa in the backdrop of economic growth hitting a six-year low of 5 per cent for the first quarter of the current fiscal.

There have been demands pouring in from various sectors - from biscuits to automobiles and FMCG to hotels - to reduce tax rates in the wake of economic slowdown.

 

The argument propagated has been to boost the consumption and domestic demand by reducing Goods and Services Tax (GST) rates further.

However, many of the states are of the view that it would not be tax prudent to allow GST rate reduction at this stage, as the compensation cess fund, which is utilised to compensate the states under the GST Act in case the revenue is below the targeted growth rate, has turned negative.

Meanwhile, according to sources, the GST Council's Fitment Committee, which comprises revenue officials of both Centre and States, has rejected demands for a cut in tax rate on items ranging from biscuits to car, owing to tight revenue position.

The GST Council may consider introduction of a special composition scheme for taxpayers supplying brick kilns, sand mining activities and stone crushers with an increased rate, sources said.

It is expected to discuss amendments in GST Laws to accommodate creation of Jammu & Kashmir and Ladakh as UTs and will also discuss the proposal moved by Kerala on introducing e-way bill system for movement of gold and precious stones, sources said.

It is likely to deliberate on the proposal of linking new GST registration with Aadhar and take the quarterly review of cases at National Anti-profiteering Authority (NAA), sources added.

Fitment panel in its report, which will be placed before the GST Council, has some good news for hotel industry as it has recommended raising tariff ceiling to up to Rs 12,000 per night under 18 per cent GST slab.

At present, 18 per cent GST rate is applicable for hotel tariff up to Rs 7,500 per night.

The committee also rejected the telecom ministry's proposal to reduce GST rate for telecom services from the present 18 per cent to 12 per cent, the sources said.

It was also decided not to tinker with the present GST structure for biscuits, bakery products, breakfast cereals, fruits and vegetables, mineral water, ready-to-eat packaged items, and several other food products.

The committee rejected the proposal of reduction in GST rate on sale of cruise tickets, which attracts GST of 18 per cent, the sources added.