The GST Council on Saturday agreed to initiate discussion on rate rationalisation in its next meeting scheduled to take place during mid-August. It will also discuss the issue of compensation cess which has a sunset clause of March 31, 2026.
Meanwhile, Finance Minister Nirmala Sitharaman reiterated that the intention of the government is to make GST assessees’ life easier by reducing compliance requirements as less than 2 per cent of the total rax taxpayers under Central GST administration have been sent tax notices.
GST Council recommends uniform rate of 12% on all milk cans
Rate Rejig
“The reconstituted Group of Ministers will present status report on rate rationalisation discussed till date. Accordingly, the Council will discuss the issue and take it forward,” Finance Minister Nirmala Sitharaman told media after GST Council meeting. However, the process to finalise the rate rejig will take time, she indicated.
On Friday, the GST Council announced that Bihar’s Deputy Chief Minister, Samrat Chaudhary will be convenor of Group of Ministers responsible for providing recommendations on rate rationalisation. The seven-member GoM has been tasked with suggesting required rate rationalisation and correction of inverted duty structure with an objective of simplifying the rate structure, reviewing the GST exemption list and enhancing revenues from Goods and Services Tax (GST).
It was originally set up in September 2021, under then Karnataka Chief Minister Basavaraj Bommai. Under his chairmanship, the panel had submitted an interim report to the GST Council in June 2022, proposing changes in tax rates for some goods and services to rationalise the levy. The rate rationalisation panel will now have to submit a final report to the GST Council suggesting changes in tax rates and slabs to usher in reforms. The GST regime has four broad tax slabs of 5, 12, 18, and 28 per cent, along with four special rates of zero, 0.25, 1.5, 3. and 6 per cent A cess is levied over and above the highest 28 per cent rate on luxury and demerit goods.
Notices
Meanwhile, Sitharaman said that as of December 31, 2023, only 1.96 per cent of all active tax assessees have been sent notices from the Central GST (CGST). Around 1.14 lakh assessees have been sent notices by the CGST out of total 58.62 lakh assessees. “I want to reassure the assessees that our intent is to make GST assessees life easier, we are working towards lesser compliance,” she said. As on date there are over 1.46 crore assesses, out of which 90 lakh are under SGST. Souces said under SGST, nearly 14 lakh have got notices.
Compensation Cess
Later, a senior Government official informed that borrowing taken to pay compensation during the Covid period is expected to be repaid during third quarter of fiscal year 2025-26 (FY26). Although the original sunset clause for compensation cess was June 30, 2022, but was extended till March 31, 2026 to replay the loan. “The next meeting will discuss what to do with the money left after repaying the entire loan. Also, what will be alternative to cess post March 31, FY26,” the official said.