New Delhi: Finance Minister Nirmala Sitharaman with Revenue Secretary Sanjay Malhotra and others throughout a media briefing relating to the end result of the 52nd Goods and Services Tax (GST) Council Meeting, in New Delhi, Saturday, Oct. 7, 2023. (PTI Photo/Manvender Vashist Lav)(PTI10_07_2023_000427A)
| Photo Credit: Manvender Vashist Lav
In a transparent sign that the GST fee rationalisation train is back on the Centre’s agenda after being in deep freeze, the authorities has reconstituted the ministerial group of the GST Council that was tasked with recommending the simplification of the complicated tax construction and a rejig of its a number of charges.
The group of ministers (GoM) on GST fee rationalisation, that was headed by former Karnataka CM Basavaraj Bommai since its formation in 2021, had been in suspended animation since the BJP’s loss in the State’s meeting polls this May. Top income officers had indicated in early 2023 that the GST charges’ rejig and simplification, long-awaited by the trade, was off the table for some time.
Karnataka’s income minister Krishna Byre Gowda has been included in the reconstituted ministerial group, however the convenor’s function for the seven-member GoM has now been assigned to Uttar Pradesh Finance Minister Suresh Kumar Khanna.
While there are 4 predominant GST fee slabs of 5%, 12%, 18% and 28%, there are a few dozen totally different charges in apply, whereas some items entice a zero fee. This is additional difficult as some objects whose tax charges rely on their packaging, like specified meals merchandise, or promoting costs, as an illustration, in the case of footwear and resort rooms.
Tax specialists and trade captains have been urging the authorities to restart the stalled fee rationalisation plan, particularly as GST revenues have stabilised at a wholesome ₹1.6 lakh crore-plus stage in latest months.
“I think the ministerial group’s reconstitution indicates that the GST rate restructuring and simplification agenda are back on policy makers’ radar. Too many tax rates lead to tremendous compliance-related problems,” stated Sacchidananda Mukherjee, professor at the National Institute of Public Finance and Policy.
“The government also understands the need to simplify the rate structure so that price-based tax setting goes away and the multiple rates are reduced for ease of tax compliance for industry as well as the Revenue Department, while giving investors more certainty,” he averred.
The GoM, whose phrases of reference stay unchanged, may make suggestions on the way forward for the GST Compensation Cess. At its final assembly in October, the GST Council initiated parleys on a “perspective plan” to impose a cess or surcharge on high of GST levies after March 2026, when the GST Compensation Cess is because of expire.
Last week, Confederation of Indian Industry president R Dinesh informed The Hindu that it’s time to simplify the GST charges to a three-slab construction to make it simpler to do enterprise and scale back litigations arising from classification disputes. He additionally referred to as for a evaluate of the GST Compensation Cess.
“The GoM shall review the current tax slab rates and recommend changes in the same as may be needed to garner required resources (and) review the current rate slab structure of GST, including special rates, and recommend rationalisation measures, including merger of tax rate slabs, required for a simpler rate structure in GST,” as per its phrases of reference.
The GST Council had, in June 2022, accepted a few of the GoM’s suggestions to withdraw exemptions and concessional charges on a number of objects. At the time, Finance Minister Nirmala Sitharaman had stated the ministerial panel had been granted three extra months to advocate the bigger overhaul of GST charges.
