GTS Council is all set to meet on Friday to take up issues by several sectors related to reduction in the taxation. Different sector has demanded that the GST rate should be brought down.
The GST Council fitment panel has rejected the rate cut demand for the auto sector, due to revenue loss of Rs 40,000-45,000 crore.
GST Council Meet
Goods and Services Tax – GST Council, headed by Finance Minister Nirmala Sitharaman, will hold its 37th meeting in Goa today.
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The meeting is being held amid a strong call for GST rate cuts for industries, including automobiles, biscuits and FMCG, which have been hit hard by the ongoing economic slowdown.
Automobile Industry
The automobile industry has demanded that the GST should be brought down to 18 percent from 28 percent to reverse the consumption slowdown.
However, the task may not be easy as states are not in favour of a major rate cuts, especially on items that fetch higher revenue for them. The compensation cess is an additional cess levied on some notified goods apart from the GST applicable to them and the revenue earned from it is shared among states.
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The fitment committee is not in favour of reduction of GST on auto sector as it believes that this will lead to severe revenue loss for the government. Though it is possible that the committee may decide to change the compensation cess in certain segments.
The fitment committee of the Goods and Services Tax (GST) Council has already rejected the proposal to cut GST rates on over 200 items. The sectos including automobiles, footwear, mineral water, etc, say reports.
Bihar Deputy Chief Minister Sushil Kumar Modi, told that none of the states would agree with the proposal of cutting GST rates in the auto sector. “The revenue implication of the move is very high. Who will bear the revenue loss of Rs 40,000-45,000 crore? Unless GST revenue stabilises, it is difficult to agree on this proposal,” he said.
FMCG and Hotel Industries
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The fitment panel has suggested the following GST rates for the hotel sector. The other proposals to be discussed during the meeting include tax cuts on FMCG and hotel industries. Currently there is no GST on Rs 1,000 per night tariff, 12 percent GST on Rs 1,000-Rs 2,499 per night tariff, 18% GST on Rs 2,500- Rs 7,499 per night tariff. 28% GST on Rs 7,500 per night tariff.
GST on hotel tariff of more than Rs 7,500 per night tariff be reduced from 28 percent to 18 percent. On outdoor catering, the GST is 18 per cent, the demand is to cut the rate to 5 per cent. The levy 28% GST on Rs 10000 per night tariff. There is also a proposal to exempt taxpayers with turnover less than Rs 2 crore from filing an annual return for 2017-18 and 2018-19.
Diamond Industries
Another sector which could get some respite is the diamond industry. The fitment committee has recommended for reduction of tax from 5 percent to 1.5 % on job work service. On semi precious stones the committee has recommended for reduction of GST from 3% to 0.25% . While the committee has suggested for doing away of GST on silver and platinum from 3% to 0%.
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The fitment committee has also accepted the demand of Railways Rolling stock industry.
The move could help the Centre increase its revenue. The total gross GST revenue collected in the month of August, 2019 is Rs 98,202 crore.