GST Council Meet and way forward

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Source-This post on GST Council Meet has been created based on the article “Move ahead – The GST Council must not dither any further on pending reforms” published in “The Hindu” on 20 June 2024.

UPSC Syllabus- GS Paper-3- Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context -GST completed seven years in June 2024. In April, revenues hit a record ₹2.1 lakh crore due to year-end compliance. May saw a slight dip to ₹1,72,739 crore, up nearly 10% from last year but slower growth since July 2021 amid COVID-19 disruptions. Domestic transaction revenues grew by 15.3%, faster than the previous month.

In the first month of the current fiscal year, revenues were 3% higher than the monthly average of ₹1.68 lakh crore in 2023-24. However, there was a decline in revenues from goods imports for the second time in three months, showing some instability.

Read more-7 Years of GST

What are the concerns regarding GST revenues?

1) There have been uneven revenue growth rates across states, with five states experiencing a decline in May and eight growing slower than the national average.

2) Council Meeting Frequency: It is usually expected to meet quarterly.However,only six meetings have been held since 2022

What is the current agenda of the GST Council?

1) The GST Council, meeting for the first time since October last year, has routine tasks such as reviewing past decisions and providing clarifications.

2) There is also a push to advance broader reforms, including rationalizing the GST’s complex rate structure and lowering levies on items like cement and insurance.

3) The Council aims to simplify compliance, especially for smaller firms.

What should be the way forward?

1) The GST Council needs to meet more frequently, it has convened only six times since 2022, well below the expected quarterly meetings.

2) There is a need to include currently excluded items such as electricity and petroleum products in the GST framework to facilitate easier credit claiming for businesses.

3) The Council should prioritize reforms to achieve the original goal of making GST a simpler and more efficient tax system. This includes restarting work on rationalizing the rate structure and ensuring all businesses benefit from simplified procedures.

Question for practice

What are the issues concerning GST revenues? What steps should be taken moving forward?

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