GST Council meeting: Discussion possible on change in rates, compensation to states top agenda
New Delhi. GST rates of some items may be changed in the GST Council meeting to be held in Chandigarh this week, while the recommendations of the fitment committee will be accepted to maintain the status quo in rates of more than 215 items.
The 47th meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and union territories, is scheduled to be held on June 28-29. The council is meeting after six months.
In the meeting, apart from rationalizing the rate, the opposition-ruled states can hotly discuss the payment of compensation to the states. The rates proposed by the Committee of Officers or the Fitment Committee will be considered on the tax rates. The committee has recommended a uniform 5% GST rate on artificial limbs and orthopedic implants. The committee has also recommended a reduction of the GST rate on ropeway travel to five percent from the present 18 percent. In addition, the GST rate on ostomy devices is proposed to be reduced from 12 percent at present to five percent.
Apart from this, a clarification will be issued on GST rates for electric vehicles, according to which EVs, whether equipped with batteries or not, will be taxed at the rate of five percent. Two reports of the Group of Finance Ministers of the states will also be presented in the GST Council. In the meeting of the GST Council, the opposition ruled states will strongly advocate for the continuation of compensation of revenue deficit. On the other hand, the Center would like to stop any such move citing tight fiscal conditions. To meet the shortfall in the GST (Goods and Services Tax) compensation fund, the Center took a loan of Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 and released it to the states. This was done because of a shortfall in cess collection.
After the 45th meeting of the GST Council in Lucknow, Union Finance Minister Nirmala Sitharaman said that the system of paying compensation to states for revenue shortfall will end in June next year. The Goods and Services Tax (GST) was implemented in the country with effect from July 1, 2017, and states were assured compensation for a period of five years against any loss of revenue due to the implementation of GST.