Facing a deepening slowdown, the auto sector is pinning hopes on the GST Council meeting on September 20 for a rate cut from 28 per cent to 18 per cent. However, states including Bihar, West Bengal, Kerala, and Punjab are of the view that the slowdown in the auto sector is not because of the GST rate but structural issues in the economy.
GST rate for petrol and diesel cars and hybrid vehicles is already at the highest bracket of 28 per cent plus cess.
Heeding to demands made by several states, the GST Council on Friday put on hold a decision to hike the tax rate on textiles to 12 per cent and referred to a panel of state ministers to recommend rate by February, Union Finance Minister Nirmala Sitharaman said. The panel, the highest decision-making body for indirect taxes, met under emergency provisions after states made a request for deferring the tax rate hike on textiles, from the current 5 per cent, to be effective from January 1, 2022. Currently, the tax rate on manmade fibre (MMF) is 18 per cent, MMF yarn 12 per cent, while fabrics are taxed at 5 per cent.
States are planning to pass resolutions in their legislative assemblies; however, such tactics will be used as the last resort if the Centre continues to stall allocations.
Economic Advisory Council to the Prime Minister (EAC-PM) chairman Bibek Debroy on Tuesday said the government was losing revenue due to the GST, which should be revenue neutral with a single rate. Speaking at an event organised by the Calcutta Chamber of Commerce in Kolkata, he however said that GST has led to a lot of simplification. "The ideal GST is one that has a single rate, and it was meant to be revenue neutral.
Singapore's single-rate GST structure cannot be India's model. But its practice of early announcement of rates much before their implementation should be emulated by India, says A K Bhattacharya.
Seven of the meetings will be held in late November or early December at the finance ministry, as is the norm.
Inter-state supply may come under GST composition
Badal, who served as the finance minister in the previous Congress government, said, "Seven years ago, I merged the People's Party of Punjab with your party. I did so with immense hope and an expectation of being integrated into an organisation with a rich history that would allow me to serve both the people of Punjab and its interests to the best of my ability."
"There will be some challenges" in the switchover to GST in the short term, Finance Minister Arun Jaitley has warned.
The government introduced the 122nd Constitution amendment Bill.
FM said a Constitution Amendment Bill for introduction of GST will be passed soon.
GST Council has also reached consensus on the definition of revenue to compensate states for revenue loss
Online skill-based gaming industry has made a case for retaining the service under 18 per cent GST slab instead of putting it into the highest 28 per cent tax rate category, saying the move will badly hit the $2.2-billion sector. The increase in taxation would not only have catastrophic impact on the industry but also encourage offshore operators who would circumvent Indian tax jurisdiction by hosting games in some other country, Games24x7 Co-CEO Trivikraman Thampy said. "It would be a triple whammy -- the industry loses out, the government loses out on tax revenue and players loses out as they would be exposed to unscrupulous operators," he said.
The old India was economically fragmented. New India will create one tax, one market, one nation, said Jaitley.
5 commodities namely crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF) were kept out of GST's purview given the revenue dependence of state governments on these sectors.
'There are unscrupulous traders who create fake invoices by showing bogus e-way bills, movement of goods.' 'Since the entities registered across different states, and kept on changing their numbers, tracing them was difficult.'
By doing away with the 1 per cent inter-state tax over and above the GST rate, the government has met one of the three key demands over which Opposition Congress has been blocking the Bill in the Upper House
The consensus was reached after the Centre agreed to the demand of states to go in for horizontal split
"This rationalisation is 3-4 month exercise," he said, adding that the GST Council decided on the rate cut on the recommendation of a Fitment Committee.
Finance Minister Nirmala Sitharaman on Thursday said taxpayer base has almost doubled to 1.28 crore in four years of rollout of the historic tax reform and the enhanced GST mop up in the recent months should now be the "new normal". In a written message to tax officers on the fourth anniversary of GST rollout, she said implementing any reform of this scale in a large and diverse country like India can be highly challenging, but GST has brought about ease in taxpayer compliance and reduced common man's tax burden.
States' demand for 5 years and Constitutional provision ruled out
Manufacturing taxes, VAT will come down, assures Jaitley
Jaitley said the Congress may be upset with the government for 'political reasons'
No longer a discretion of the tax administrator, the audit of returns filed by taxpayers is now based on a selection by algorithms, notes Tarun Bajaj.
Bihar became the first non-NDA state and overall second after the BJP-ruled Assam to pass GST bill.
The Centre is against giving any shock in the first year of the rollout by bringing in new services.
GST will also make our exports more competitive and also provide a level playing field to domestic industry to compete with imports, the President said.
Amid an outcry over record high petrol and diesel prices, Union Finance Minister Nirmala Sitharaman on Saturday said the Centre and state governments will have to together work out a mechanism to bring retail rates to reasonable levels.
The GST Bill, seen as single biggest tax reform in a long time, needs to be ratified by at least 15 state legislatures before the President can notify the GST Council which will decide the new tax rate and other issues
The GST will replace more than a dozen levies central and state levies, including central excise duty, service tax and central sales tax as well as VAT on sale of goods and entry tax, to make movement of goods seamless across 1.3 billion market.
The object of the government policy cannot be such that luxury items become cheaper, pointed out Jaitley.
Following passage of the Constitution Bill, 2014, Dass and Finance Minister Himanta Biswa Sarma, who introduced it in the House, exchanged sweets.
The instructions cite service rules that bar any government servant from making any adverse criticism of any policy or action of the government.
'We have already given Rs 1.59 trillion to states.' 'So, there is no question of giving them more.'
The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 per cent agreed upon last year, but is only a provision being built into the model law to take care of contingencies in future, two officials in the know told PTI.
The question on who should borrow from the market and whether the borrowing will be under two buckets should be decided by the GST Council, and not by the Centre. If there is no consensus, there has to be a vote, says A K Bhattacharya.
GST reform has been hanging fire since 2006-07.
It was better to first build a single-rate GST with a low rate, achieve full mastery of this, and then consider more complex possibilities such as high rates and multiple rates.
According to Mitra, items such as foodgrain, vegetables, leather goods, footwear, cottage cheese, puffed and flattened rice, books and entertainment tax, among several others, should be in the zero-tax bracket.
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