Decision of Recent GST Council

Source: The post decision of recent GST Council has been created, based on the article “A fresh start: The GST Council must not lose sight of broader reforms” published in “The Hindu” on 29th June 2024

UPSC Syllabus Topic: GS Paper3- Economy- mobilisation of resources

Context: The article discusses the recent GST Council meeting, which addressed various tax issues, provided exemptions, and aimed to simplify the GST system. It also mentioned plans for future reforms, including rationalizing tax rates and incorporating excluded items like petroleum and electricity.

For information on GST Council read this article here

What did the GST Council decide in the recent meeting?

1. Exemption Decisions: The GST Council exempted hostel accommodation up to ₹20,000 per month and railway services from GST, reducing costs for students and rail passengers.
2. Rate Unification: A uniform GST rate of 12% was set for packing cartons, milk cans, and solar cookers, eliminating inconsistencies in tax rates based on materials or technology.
3. Interest and Penalty Waivers: Interest and penalties on tax dues from the first three years of GST implementation will be waived if paid by March 2025, providing relief to taxpayers.
4. Appeal Pre-deposits: The required pre-deposits for filing appeals were lowered, making the appeals process less burdensome for businesses.

What changes will affect industry and tax administration?

1. The anti-profiteering clause was removed, which had required companies to pass on tax cut benefits to consumers.
2. The Council also plans to implement Aadhaar authentication for GST registrations to prevent fraud and make the process more efficient.

What future plans were discussed?

1. Review of GST Rate Structure: The Council discussed plans to review the GST rate structure, particularly the multiple-rate system that was last planned for rationalization in 2021 but has been inactive since.
2. Extension to Excluded Items: Plans to bring previously excluded items like petroleum and electricity under the GST umbrella were mentioned, indicating a significant expansion of the GST net.

3.Tax Rate Adjustments: There is an intention to possibly adjust tax rates in the future, aiming to better align them with economic needs and simplifications.

Question for practice:

Discuss the key decisions and future plans outlined by the GST Council in its recent meeting regarding tax exemptions, rate unification, and reforms for it.