The Group of Ministers (GoM), constituted to review the current rate slab structure under the Goods and Services Tax (GST) regime, will prepare an interim report and will seek an extension of its tenure in the upcoming GST Council meeting on June 28-29. Discussions held so far on GST rates, inverted duty structure for sectors, except textiles, and some exemptions will be part of the interim report but a consensus on a final report could not be reached in the absence of a complete agreement within the GoM members on tweaking the tax slabs, officials said.
In a meeting held on Friday, the GoM agreed upon putting together an interim report detailing the discussions held so far. “The report has not been finalised yet. Extension will be sought for the GoM. Textiles inverted duty structure has been left like that, it will be taken up in the next meeting,” a state finance minister, who is part of the GoM, told The Indian Express.
In its 46th meeting in December, the Council had deferred the proposed hike in tax rate for the textiles sector to 12 per cent from 5 per cent, which was to be implemented from January 1. “Status quo will be maintained for the GST rate for textiles as of now and a ministerial panel will review the rate structure by February,” Finance Minister Nirmala Sitharaman had said after the meeting.
An inverted duty structure arises when the taxes on output or final product is lower than the taxes on inputs, creating an inverse accumulation of input tax credit which in most cases has to be refunded.
The GoM has had three meetings so far. In its meeting last November, it had discussed various proposals for rate rationalisation and measures to shore up revenues. While an officer-level fitment committee is learnt to have recommended raising of tax rates from 5 per cent to 7 per cent and 18 per cent to 20 per cent, some state finance ministers had then flagged potential concerns over the impact of such major rate changes. Some states had cited concerns about the inflationary impact of any such major rate hikes, especially in the aftermath of the pandemic.
The panel, headed by Karnataka Chief Minister Basavaraj S Bommai, was formed in September last year with an overarching mandate: an evaluation of “special rates” within the tax structure, rationalisation measures that include “a merger of tax rate slabs for simplifying the rate structure”, alongside a review of instances of inverted duty structure and an identification of potential sources of evasion to shore up revenues. Though GST revenues have shown buoyancy in recent months, rate changes are also under purview as the compensation to states for revenue losses under GST will come to an end in June 2022.
Source: The Indian Express
https://indianexpress.com/article/business/economy/gst-panel-to-draw-up-interim-report-seek-tenure-extension-7976295/
