NewDelhi: A crucial GST Council meeting will be held on Friday. The Council, which is headed by Union Finance Minister Nirmala Sitharaman and includes representatives of all states and Union territories, is meeting for the first time in nearly eight months.
The 43rd meeting of the top decision-making body is likely to discuss a reduction in the tax rate on Covid medicines, vaccines and medical equipment as well as means to make up for the shortfall in revenues promised to states.
A PTI report quoting sources said that finance ministers of eight states ruled by non-BJP and like-minded parties — Rajasthan, Punjab, Chhattisgarh, Tamil Nadu, Maharashtra, Jharkhand, Kerala and West Bengal — have devised a joint strategy to press for a zero tax rate on Covid essentials.
Besides discussion on tax rates, the GST Council may also deliberate on the estimated Rs 2.69 lakh crore that states need to be provided as per the promise in 2017 to make good any loss in revenue they suffer because of giving up their right to levy VAT and other taxes, PTI added.
Sources said the Fitment Committee on GST rates, comprising tax officers of Centre and states, has also given its report to the Council listing out the pros and cons of waiver and zero-rating of Covid vaccines, drugs and other equipment.
Exempting final products from GST would deny manufacturers the option to claim the benefit of the input tax credit on raw materials and hence not much benefit accrues to consumers.
In the 42nd GST Council held in October last year through video conferencing, it made the following recommendations:
1. Levy of Compensation Cess to be extended beyond the transition period of five years i.e. beyond June, 2022, for such period as may be required to meet the revenue gap. Further details to be worked out.
2. Centre releasing compensation of Rs 20,000 crore to States towards loss of revenue during 2020-21 and an amount of about Rs 25,000 crore towards IGST of 2017-18 by next week.
3. Enhancement in features of return filing
4. As a further step towards reducing the compliance burden particularly on the small taxpayers having aggregate annual turnover < Rs. 5 cr., the Council’s earlier recommendation of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented w.e.f. 01.01.2021. Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan.
5. Revised Requirement of declaring HSN for goods and SAC for services in invoices and in FORM GSTR
6. Amendment to the CGST Rules
7. Refund to be paid/disbursed in a validated bank account linked with the PAN &Aadhaar of the registrant w.e.f. 01.01.2021.
8. To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.
Earlier this month, Sitharaman virtually ruled out exempting Covid vaccines, medicines and oxygen concentrators from GST, saying such an exemption will make the lifesaving items costlier for consumers as manufacturers will not be able to offset the taxes paid on inputs.
Currently, domestic supplies and commercial imports of vaccines attract a 5 per cent GST while COVID drugs and oxygen concentrators attract a 12 per cent levy.
Bureau Report
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