The all-important three-day meeting of the GST Council, is scheduled for October 18 to October 20th, which will decide on the GST tax rates and other items including
1. Calculation of tax revenues to estimate compensation to states for likely loss in revenue.
2. Issue of Dual Control over Assessees
3. Control Over Service Tax Assessees
4. Applicable rates of GST
5. Exemptions and negative lists
With the finance ministry setting November 22 as the deadline for building a consensus on all issues in the Council, the upcoming meeting is significant as it will decide on its most crucial aspect, which is the tax rate that will have a bearing on the common man.
There seemed to be consensus on Issues related to Dual control and assessment of 11 lakh Service tax payers by the centre in the first Council meeting, however, a few states led by Uttar Pradesh raised an objection to it in the second meeting. Finance Minister Arun Jaitley did not put the matter to vote as he wanted all decisions by consensus. It will be interesting to note if council can resolve all differences in the meeting or matters are decided by vote.(Centre has 1/3rd voting rights and 2/3rd voting rights are equally divided among all states )
At its previous meeting last month, the GST Council, which has all state finance ministers as members, had finalised area-based exemptions and how 11 states, mostly in the North-East and hilly regions, will be treated under the new tax regime.
The finance ministry will try and get a final decision on these key issues to enable subsequent Central GST (CGST) and Integrated GST (IGST) legislations to be introduced in the Winter Session of the Parliament that will begin on November 16.
Last year, a panel headed by the Chief Economic Advisor, Arvind Subramanian, had suggested a standard rate of 17-18 percent for goods and services in bulk, while recommending 12 percent for low rate goods.
Another 40 percent rate was suggested for luxury cars, aerated beverages, pan masala and tobacco. For precious metal, it recommended a range of 2-6 percent.
Finance Minister Arun Jaitley last week said “The indirect tax regime that we are planning, the rate of taxation on such products which are going to be environmentally unfriendly would be distinct from the normal rate of taxation. This is one of the proposals being discussed,” thus the tax on non-environment-friendly products can be expected to be higher than standard rate.
As for the formula for the Centre compensating loss of revenue to states, following alternatives have been discussed but final decision is to be taken
So far, as many as 6 issues have been settled by the GST Council, including finalisation of rules for registration, rules for payments, returns, refunds and invoices.
The clock is ticking and we hope that most of the issues will be resolved in the upcoming meeting as it is crucial if we are to meet the April 1 2017 deadline for implementation of GST.