A committee of central and state officers that reviews Goods and Services Tax (GST) rates will look into suggestions for tax rate cut on cement for the GST Council’s consideration, Central Board of Indirect Taxes and Customs (CBIC) chairperson Vivek Johri said on Friday.
The next meeting of the GST Council is scheduled for 18 February, which will consider legal and tax rate-related matters that have already been reviewed by the fitment committee but the cement issue is not likely to figure in the February meeting of the Council.
“GST Council is scheduled to meet on 18 February. Agenda yet to be circulated. There are some issues which have been examined by fitment committee and the law committee,” Johri said.
On the issue of lowering the tax rate on cement, Johri said that the finance minister has said the 28% GST on cement needs to be discussed. “The fitment committee will meet to discuss this. Their recommendation will be taken up by the Council for discussion,” Johri said in response to a question from reporters on the sidelines of an event organised by the tax authority marking the induction of its new recruits.
The industry is seeking a reduction in the tax rate on the construction material as it will help to lower the cost of projects.
Discussions around lowering the GST on cement are taking place at a time India is focusing on infrastructure-led growth. The Central government is planning to make ₹10 trillion in capital expenditure in FY24 to boost the economy, create demand in the economy and add more jobs.
GST on cement in the highest slab of 28% is particularly an issue for individuals building homes as they do not get any tax credit for the GST paid on cement. As far as the industry is concerned, only in the case of under-construction properties, developers get credit for the taxes paid on raw materials, which helps to make taxation optimum and efficient on the sale of flats to consumers. In the case of construction completed properties on which there is no GST liability, the tax on raw materials get embedded into the property’s price. All these consumers and the government’s capital spending cause are likely to benefit from a rate cut.
Later Johri told the new revenue service officers that this year, the tax authority was targeting revenue collection of ₹13.85 trillion and ₹15.29 trillion in FY24, about two-third of which comes from GST.
Johri said that the taxpayer base of 5 million at the time of GST rollout has now gone up to 14 million. The strategy, as far as GST is concerned, has always been to balance between enforcement and taxpayer facilitation, Johri said. The tax authority has been successful in scaling up return filing compliance with nearly 90% of all registered entities filing monthly tax returns till the end of the month.