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What is the news?
Recently, GST Tax Council held its first physical meeting during the pandemic. It approved various changes.
Concessional tax rates on vital COVID-19 equipment such as oxygen concentrators will lapse on Sep 30, while the lower rates on medicines were extended till December.
As there are no signs the virus and its variants would be extinct on New Year’s Day, it was expected from the council to take a more considerate view on pandemic essentials.
What were the outcomes of the council meeting?
First, tax rate modifications were okayed for a range of sectors with long-pending course correction on inverted duty structures for several items, including footwear and textiles.
Second, clarity was given on the definition of an intermediary as it was hurting several sectors, including IT services exports. Double taxation on the import of leased aircraft goes.
Third, council dismissed any shift of petroleum products to GST to lower the tax burden
Fourth, GST cess on automobiles, tobacco and aerated drinks will now be levied till April 2026, not June 2022 as originally envisaged
Fifth, states requested for an extention of the GST compensation period. But Centre claimed that GST revenue is below expectation.
What are the recommendations of the council?
First, food delivery services players shall be made liable to collect and remit taxes instead of the restaurants.
Second, inc in consumption may lead to inc in private investments. For that, Centre and States must begin talks on rationalising fuel taxes.
Third, to increase spending, both Centre and states need to give up a little revenue.
Fourth, two ministerial groups have been tasked to augment revenues using technology and rate rationalisations.
Fifth, Centre need to discuss States’ compensation concerns, as had been promised.
Source: This post is based on the article “A time to introspect” published in The Hindu on 23rd September 2021.
