Rate rationalisation, covering the future course for tax slabs and correction of inverted duty structure, under the Goods and Services Tax (GST) regime, notices being sent to companies for their overseas operations, and the recent debate over tax rate on insurance premium are likely to be discussed in the GST Council meeting to be held next month. In an official statement on Tuesday, the Council said the next meeting would be held on September 9.
“The 54th Meeting of the GST Council will be held on 9th September, 2024 at New Delhi,” GST Council said in a post on social media platform X.
Before the Council meet, officers from states and Centre will meet on September 8. “There is the unfinished agenda of rate rationalisation. A move towards it would require initial steps in the form of discussions within the ministerial committee. The committee would be asked to present the work done so far for a wide ranging discussion in the Council. It also needs to be looked into whether a timeline has to be fixed for the ministerial committee to submit its recommendations on rate rationalisation and changes in the slabs,” an official said.
The Council is also expected to take up the notices being sent to companies, especially for their overseas operations even after having issued a clarificatory circular earlier. GST authorities had earlier this month made a partial reversal from their earlier position by withdrawing notice of Rs 3,898 crore to tech major Infosys out of the total tax demand of Rs 32,403 crore raised earlier in July-end for the five-year period starting 2017-18.
In its previous meeting held in June, the GST Council, which had met for the first time since the formation of the new Union government, tweaked tax rates on some items, and took a series of steps to bring down litigation and ease compliance for taxpayers. The overall GST rate rationalisation and streamlining of the slab structure, which falls into four broad categories of 5 per cent, 12 per cent, 18 per cent and 28 per cent, has been a long pending issue.
After the previous Council meeting on June 23, Sitharaman had said the next meeting of the GST Council the Group of Ministers (GoM) on rate rationalisation under Bihar Deputy Chief Minister Sumant Chaudhary, will give a presentation on the status of the work and aspects covered by the panel and work pending before the panel. “There will be a presentation by the GoM irrespective of whether the report is draft… and then Council will start the discussion on rate rationalisation in the next meeting,” Sitharaman had said.
In September 2021, the GST Council had set up a GoM to examine rate rationalisation. The committee had submitted an interim report in June 2022. While there have been internal discussions about merger of slabs or creation of a new slab in between 12 per cent and 18 per cent, the concerns have centred around whether it would create any revenue losses for the states and the Centre. The concern of maintaining revenue neutrality has weighed on such discussions earlier. Revenue neutrality is seen as a crucial factor as a study by the RBI had earlier shown that while the Chief Economic Advisor’s report had pegged the revenue neutral rate at 15.3 per cent, the weighted average GST rate stood at 14.4 per cent in May 2017, and subsequently dropped to 11.6 per cent by September 2019.
