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On Table for GST Council’s Meet: Higher cess on luxury items to raise more money for natural calamities

On Table for GST Council’s Meet: Higher cess on luxury items to raise more money for natural calamities

The 30th meeting of the GST Council will be chaired by finance minister Arun Jaitley through video-conferencing today. The GST Council will examine a proposal on whether and how a cess on luxury and demerit goods can be increased to raise additional funds for states affected by natural calamities.

A panel of officials from the finance ministry has been looking at various mechanisms to raise additional funds, in line with what the Kerala government has been asking after the devastating floods swept through the southern state leading to severe loss of life and property.

The officials will submit their proposal to the Council that is expected to meet via video conference on Friday.

Another way to raise additional funds, a government official said, will be to create a specific cess to address the concern of natural calamity, which states in hilly areas such as Himachal Pradesh and North Eastern states also faced recently.

While officials fear the possibility of the proposed cess snowballing into a political tool in the hands of states hit by natural calamities, the exact contours and shape of the cess will be finalised and approved by the Goods and Services Tax (GST) Council. Another crucial aspect is whether cess will come with a sunset clause, a decision that will be taken by the Council.

While constitutional amendment as per Article 279A (4), says that the ‘Council will make recommendations to the Union and the States on important issues related to GST, like…special rates for raising additional resources during natural calamities/disasters’, officials said that it is not clear if a cess can be imposed for any purpose other than giving compensation to states.

On September 20, Kerala Finance Minister Thomas Isaac met Finance Minister Arun Jaitley to discuss the proposal to levy a calamity-related cess for a short duration.

“GST must be made flexible to accommodate unforeseen urgent demand for resources as in the case natural calamities. Kerala welcomes the suggestion of hon’ble FM for a national level cess on selected commodities for a specified period to help such states. GST Council to discuss,” Isaac said in a tweet last week.

The Council, headed by finance minister Arun Jaitley will also discuss ways to address revenue shortfall. Revenue collection from GST declined to Rs 93,960 crore in August, the lowest in the current financial year 2018-19. The average collection during April-August was Rs 96,705 crore, less than the government’s monthly target.

While the government may not be in a position to cut rates, some states have demanded a reduction in the rate levied for cement from 28 percent slab to 18 percent.
The Council will also discuss the cases and progress of the anti-profiteering mechanism under GST.

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Source: moneycontrol
30th GST Council Meeting Date Announced Will Be Held On 28 September

30th GST Council Meeting Date Announced Will Be Held On 28 September

The 30th Good and Services Tax (GST) Council meeting will be held on September 28 via video conferencing, in which the proposal to cut rates on some items could be taken up. The GST Council may cut tax rates on cement, air conditioner and large screen televisions.

The GST Council had reduced tax rates on over 100 items in its July meeting including refrigerators, small screen colour television, washing machines while leaving air conditioners, large screen TVs in the highest bracket of 28%.

The government has said that sooner or later only sin goods will be kept in the 28% GST bracket. However, further rate rationalisation decision will depend on revenue buoyancy.

It is also likely that Kerala Finance Minister Thomas Isaac will bring to the table the idea of levying cess for funding relief measures after the Kerala floods. On August 23, Thomas Issac had said that he would approach the GST Council for a cess to finance the relief efforts.

Moreover, the GST Council may also take up some of the issues discussed relating to the SMEs in the last meeting as well. The council had handed over the issues faced by the SME sector to a sub-committee, on the basis of which, the former will take decisions.

Experts are expecting the GST Council to address various issues being faced by the SMEs including the extension of some monetary sops and simplification of the procedure.

Finance Minister Arun Jaitley, who was on leave after his surgery, will chair the meeting first time after resuming office in August. The GST Council is comprised of the finance minister as the head and his state counterparts.

Source- Financial Express


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