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The 54th meeting of the GST Council is scheduled to be held on September 9, in which rationalization of tax rates may be discussed. Finance Minister Nirmala Sitharaman said that on the request of the states, the GST Council may also consider extending the GST compensation cess till June 2025.
The 54th meeting of the GST Council will be held on 9 September
According to the information, the GST Council of India will meet on September 9 next month. The rationalization of tax rates may be discussed in the 54th meeting of the GST Council to be held next month, but a decision on the change in this regard is yet to be taken. The Finance Minister said that major issues including possible expansion of luxury goods and GST compensation cess will be discussed.
Rationalisation of tax rates was discussed in a meeting chaired by Bihar Deputy Chief Minister Samrat Choudhary last week, though all agreed that there should be no change in tax slabs. Sitharaman said the government's aim is to simplify GST rates without increasing taxes on any product. She also praised state finance ministers for putting aside political differences and making a collaborative effort to raise revenue.
The duration of GST return cess may be extended
The Finance Minister said that on the request of the states, the GST Council may also consider extending the GST compensation cess till June 2025. This cess is currently in force and is levied on certain goods to compensate for the revenue loss to the states due to the implementation of GST. The GST Council will also discuss keeping health and life insurance out of the 18% tax bracket in its meeting on September 9.
Decision on the use of deposited funds
Many states, including Karnataka, have raised the issue that the states should decide the amount that should have been given as compensation, but the central government used it during Covid. The council may also discuss how GST resources should be distributed among the states. This is an important issue in which many states have been demanding changes since the implementation of GST.
Where is this money used?
The compensation cess expires in June 2022, but the amount collected through the levy can be used to compensate the Rs 10,000 crore borrowed by the Centre during Covid-19. 2.69 lakh crore for interest and principal repayment. The GST Council will now have to decide on the fate of the existing GST compensation cess in its name and the manner of its distribution among the states after the repayment of the loan. To meet the resource shortfall to the states due to low compensation subsidy, the Centre has borrowed and released Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 as back-to-back loans. In June 2022, the Centre extended the recovery of compensation cess till March 2026.