GST Council Meeting 2021: Here Are The Highlights
Finance Minister Nirmala Sitharaman chaired the 45th meeting of the Goods and Service Tax (GST) Council in Lucknow yesterday (17 September) — the first physical meeting of the members in two years.
She briefed the media after the meeting and elaborated on the decisions taken by the council members.
Highlights of the meeting
Petroleum products will be kept out of the GST regime for now. The FM said that the discussion on the issue was held purely at the behest of the Kerala High Court and members made it clear that they didn't want petroleum products to be included.
Consumers will have to keep paying the Compensation Cess levied on products like automobiles, tobacco products and aerated water till March 2026 instead of July 2022 as originally envisaged at the time of rolling out the indirect tax regime. This will be tapped for covering the gap between States’ actual revenues and the promised 14 per cent annual revenue growth - both the principal amount as well as the interest payable on these borrowings.
Union government is not amenable to some States’ demand to extend the five-year period after implementing the GST regime (till July 2022) for which they were assured a compensation by the Centre so as to guarantee a 14 per cent revenue growth.
Two groups of ministers (GoMs) formed that have to recommend measures within two months to shore up the GST revenues. The first one will review tax rate rationalisation issues to correct anomalies in the rate structure, while the other will look to tap technology (e-way bills, Fastags, compliance and composition schemes) to improve compliance and monitoring.
The FM informed that while the GST regime had originally been premised on a revenue-neutral tax rate of 15.5 per cent, the actual GST revenues had been going down with the effective tax rate slipping to 11.6 per cent due to changes made in the tax rates.
Inverted duty structure on footwear and textiles will be corrected from January next year. On locomotives and certain railway parts, GST rate has been increased to 18 per cent from 12 per cent to correct inverted duty structure. On the same note, 12 per cent GST will be applicable on specific renewable devices.
The GST Council has extended the GST rate cuts on Covid essential items till 31 December. However, the latest extension only includes medicines and not other medical equipment.
States charge national permit fee for granting permit to goods carriage to operate across India. This national permit fee has been exempted from GST. Trainees under skill development programs will also not need to pay GST.
The government has also extended the GST exemption on transport of export goods by vessel and air by one more year ill September, 2022. The exemption was given due to the difficulty faced by exporters in seeking tax exemptions.
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