The Goods and Services Tax (GST) Council will consider proposals to give tax relief to consumers and reform the GST structure to make compliance easier for businesses at a two-day meeting starting 3 September, two persons informed about the development said.
The Council meeting in New Delhi will be preceded by a meeting of central and state officials.
Finalizing the schedule of the Council meeting a day after a key ministerial panel of the Council endorsed the central government’s proposals for steep tax rate reductions and reforms in the indirect tax structure indicates the urgency with which central and state officials are preparing for the sweeping changes to the tax structure meant to deliver a consumption stimulus and make life easier for businesses, especially for small businesses and exporters.
“The central government is committed to implementing the reforms and the rate cuts before the festive season,” one of the two persons quoted above said on the condition of not being named.
The idea is to implement the proposals quickly so that consumers planning purchases before Deepavali, celebrated in October, benefit from them.
The meeting schedule is also such that an announcement could come before the grand day of Onam celebrations, which falls on 5 September this year.
Ganesh Chaturthi, which falls towards the end of August and Onam, mark the beginning of the festive season which peaks around Deepavali and continues till Christmas towards the end of December. Fast-moving consumer goods and consumer durable companies have hectic sales during this period.
“The move Indicates that policy makers are very serious about announcing the changes recommended by the group of ministers set up by the Council, well ahead of Diwali so that consumers benefit without any need to defer purchases,” an tax expert said.
Queries emailed to the finance ministry and to the GST Council on Friday seeking comments remained unanswered at the time of publishing.
On Thursday, the GST Council’s ministerial panel that reviewed central government’s proposals endorsed dropping the 12% and 28% GST slabs from the current four-slab structure in favour of a new two-rate structure, Mint reported on Friday, quoting the panel’s convenor and Bihar deputy chief minister Samrat Chaudhary.
As per the proposed changes, most of the goods in the 12% slab will be shifted to 5% and many of the items in the 28% slab to 18%, while some goods like high-end cars and tobacco and its preparations are likely to go to a new 40% slab.
Also, the GST compensation cess currently levied on some of the goods in the 28% slab including cars and tobacco will be done away with. Cars including SUVs are expected to get significant tax relief.
However, sin goods such as tobacco and aerated drinks may face a new duty so that the tax incidence on them remains the same after the restructure.
Some of the states have sought the Centre to compensate them for any short-term revenue loss. The thinking in the government is that improved demand for goods and services in the economy will help to make up for the revenue loss, in due course.
Insulin, condensed milk, preserved fish and vegetables, granite and marble, tableware and kitchenware and certain pharmaceutical products are among the products that will move from 12% to 5%.
