The 56th GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising finance ministers from all states, has approved the launch of an automated GST refund system for exporters, according to ET NOW sources.
The move is aimed at easing compliance, speeding up refund processing and improving cash flow for businesses engaged in overseas trade.
GST registration within a time-bound manner
Along with this, the Council has also cleared a proposal to provide GST registration within a time-bound framework. Officials say this will simplify the process for businesses, especially small enterprises, and improve ease of compliance.
Two-day Council meet on rate rationalisation
The two-day GST Council meeting began on Wednesday with a focus on rate rationalisation, GST slab restructuring, and compensation cess. Sources told ET NOW’s Prakash Priyadarshi that the meeting is still underway, with state ministers presenting their remarks and item-by-item discussions continuing on the recommendations.
Currently, the GST regime has four slabs — 5%, 12%, 18%, and 28% — along with a 3% slab for jewellery. The Centre has proposed a simplified two-rate structure of 5% and 18%, with a separate 40% slab for luxury and sin goods such as tobacco, cigarettes, and alcohol. The Council is also considering cutting rates on many items from 28% to 18% and shifting most goods under the 12% slab to 5%.
Impact on common goods
If approved, the proposal will lower tax rates on several common-use items. Everyday food products like ghee, nuts, bottled drinking water (20 litre), non-aerated drinks, namkeen, and medicines could move from 12% to 5%. Household goods including pencils, bicycles, umbrellas, and hairpins may also shift to 5%. Electronics such as certain categories of televisions, washing machines, and refrigerators are likely to fall into the 18% bracket instead of 28%, reducing prices.
Concerns over revenue loss
According to ET NOW’s Prakash Priyadarshi, state governments have raised concerns about potential revenue losses from the restructuring. They are demanding a clear compensation framework from the Centre to offset losses and ensure that the benefits of rate cuts are passed on to consumers rather than retained by companies.
Major announcements expected
The Centre has presented a comprehensive proposal for the next-generation GST system, and the final decision is expected to be announced by Finance Minister Sitharaman on Thursday, September 4. Deliberations are still progressing, and major announcements are likely once discussions conclude.
