The GST Council that is set to meet today may turn thorny, with non-BJP ruled states still being in disagreement with the Centre on the compensation issue. While as many as 21 states, mostly ruled by BJP or parties which have supported it on issues, had till mid-September opted to borrow Rs 97,000 crore to meet the GST revenue shortfall in the current fiscal, opposition-led states like West Bengal, Punjab and Kerala have not yet accepted the borrowing option given by the Centre.
Here are the key issues that might be in focus during the 42nd GST meeting:
1. Options to bridge GST revenue shortfall, 21 states favour option 1
In its last meeting, the council gave its member states two borrowing options. The first option allowed states to borrow the tax collection shortfall on account of GST implementation estimated at Rs 97,000 crore by issuing debt under a special window coordinated by the Finance ministry. The second option allowed states to borrow the Rs 2.35 lakh crore shortfall, including the shortfall due to the COVID-19 pandemic, by issuing market debt.
ET Now had earlier reported that as many as 21 states are in favour of the first option. This puts the centre on a stronger footing in case the issue is out to vote in the GST Council. Under the GST act, only 20 states are needed to pass any resolution during voting.
2. Opposition states may push for a third option
While as many as 21 states, mostly ruled by BJP or parties which have supported it on issues, had till mid-September opted to borrow Rs 97,000 crore to meet the GST revenue shortfall in the current fiscal, opposition-led states like West Bengal, Punjab and Kerala have not yet accepted the borrowing option given by the Centre.
Sources told news agency PTI that the Opposition-ruled states would object to the Centre’s borrowing options and demand an alternative mechanism for funding GST compensation deficit. They feel that the constitutional liability of compensating states lies with the union government. In the current fiscal, the states are staring at a staggering Rs 2.35 lakh crore Goods and Services Tax (GST) revenue shortfall.
3. Opposition States to push for a dispute resolution mechanism
Objecting to the Centre’s two borrowing options offered and what the states are looking at as a “threat” that there would be no compensation if they do not opt for either, Opposition-ruled states have decided to demand that a dispute redressal mechanism be activated and a vice-chairperson be appointed to GST Council.
4. Centre may push for raising cess on sin & luxury goods to 7 years from 5 years : As per information coming from reliable sources GST Council has decided to extend the Compensation cess levy beyond June 2022. Extension timeline to be reviewed and decided from time to time.
5. Lower rate for Ayurvedic hand sanitizers
The council may consider lowering the rate on ‘Ayurvedic’ hand sanitisers to 18 percent from 12 percent.
6. GST exemption on the launch of satellite services
The council is also expected to exempt the launch of satellite services supplied by ISRO, Antrix Corp., and New Space India Ltd. from the GST. Currently, the supply of satellite launch services by ISRO, Antrix, or NSIL to a person located in India is taxable at 18 percent.
7. UPI payments option on GSTN
The council is expected to consider allowing Goods and Services Tax Network the firm which is building the information technology backbone of the GST regime to provide UPI and IMPS as an option for tax payments on the GST portal based on a request by National Payments Corporation of India.
Source: timesnownews.com
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