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GST Council Meet today: What will be the agenda? Check here

The 53rd GST Council meeting is set for June 22, 2024, in New Delhi.

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GST Council Meet today: What will be the agenda? Check here
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The agenda for the upcoming GST Council meeting remains undisclosed, but state finance ministers are expected to present suggestions for the indirect tax regime to be incorporated into the Union Budget, likely to be presented next month. Industry stakeholders are looking forward to discussions on restructuring the complex multiple-rate tax structure, especially given the significant rise in GST revenue. Additionally, a review of the 28 percent levy on online games, horse racing, and casinos is anticipated.

The inverted duty structure (IDS), which creates a cash flow burden and accumulates unusable Input Tax Credit (ITC), is a major issue expected to be addressed. This structure particularly impacts sectors such as textiles, footwear, and fertilizers. Shivam Mehta, Executive Partner at Lakshmikumaran & Sridharan Attorneys, highlighted industry hopes for relief from hardships caused by the new rule for corporate guarantee valuation. The industry seeks amendments to base the value of supply on the actual loan amount disbursed and to exempt the rule where full ITC is available to recipients. There is also ongoing discussion about including petrol, diesel, ATF, natural gas, and selected petroleum products under GST, which would require the Centre to coordinate with the states.

The 53rd GST Council meeting is set for June 22, 2024, in New Delhi. In its last meeting on October 7, 2023, the Council discussed a plan to impose a cess or surcharge on top of GST levies after March 2026, when the GST Compensation Cess expires. Future discussions will focus on a replacement levy and its utilization.

Tax experts also hope the Council will address long-pending operational issues. Saurabh Agarwal, Tax Partner at EY, emphasized the need for an amnesty scheme to clear GST-related tax disputes, which would help reduce litigation and ease the burden on businesses. Rajat Bose, Partner at Shardul Amarchand Mangaldas & Co, suggested examining GST compliance to enhance ease of doing business, including the ability to file revised returns. He also proposed expanding GIFT CITY benefits to sectors like Data Centres and Data Embassies, and urged the government to push for infrastructure development and practical measures to strengthen the economy.

One key issue to watch is the review of the 28 percent GST on online gaming, casinos, and horse racing. The Council had recommended this rate for actionable claims in these areas during its meeting on July 11 last year, with amendments to remove ambiguities. Smita Singh, Partner at S&A Law Offices, noted the need for clarification on issues related to online gaming, which now faces a higher tax rate on certain services. There is also a strong demand for rationalizing the current four-tier GST rate structure (5 percent, 12 percent, 18 percent, and 28 percent).

The GST Council may also address the inverted duty structure affecting industries like textiles and fertilizers. In the pharmaceutical sector, inputs attract 18 percent GST while the final products are taxed at 5 percent, leading to blocked capital. The EV sector faces similar issues, with inputs taxed at 18-28 percent and EVs at 5 percent GST. Automobile companies are hoping for a reduction in the 28 percent GST (plus 3 percent cess on models above 350cc) on scooters and motorcycles, which are essential for lower-income groups and rural areas.

Additional issues for the Council's consideration include the taxability of ESOPs, corporate guarantees, and various rate-related clarifications due to increased litigation. New regulations on ISD and their implementation date are also anticipated.

Recent data from the Ministry of Finance indicated that GST collections for May 2024 reached Rs 1.73 lakh crore, a 10 percent year-on-year increase. In April, GST collections surpassed Rs 2 lakh crore, marking a record Rs 2.10 lakh crore, up 12.4 percent year-on-year. This growth was driven by a 15.3 percent increase in domestic transactions and a 4.3 percent decline in imports. After refunds, net GST revenue for May 2024 was Rs 1.44 lakh crore, reflecting a 6.9 percent year-on-year growth.

 

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