BIG PICTURE GST COUNCIL – 38th meeting

In its 38th meeting, the GST Council voted for uniform rate of 28% on lotteries across the country. It was for the first time since the launch of the new overarching indirect tax that the Council took a decision through the voting route.

TAKEAWAYS FROM THE MEETING

  • Rationalized 28% GST on lotteries.
  • The government has set a Rs. 1.10 lakh crore monthly GST collection target in the remaining four months of this fiscal year.
  • Council discussed the ways and measures to increase the tax collection and check tax evasion
  • Discussed the measures to curb inverted duty structure.

Way forward:

Have to consider bringing fuel into the ambit of GST. Also other items which are outside the GST, including electricty. Hormonisation of the slabs has to be expedited, so that tax rates will be lesser and tax evasion would reduce

What is Inverted Duty Structure?

Inverted duty structure is a situation where import duty on finished goods is low compared to the import duty on raw materials that are used in the production of such finished goods. For example, suppose the tariff (import tax) on the import of tyres is 10% and the tariff on the imports of natural rubber which is used in the production of tyres is 20%; this is a case of inverted duty structure.

When the import duty on raw materials is high, it will be more difficult to produce the concerned good domestically at a competitive price. Several industries depend on imported raw materials and components.

About: GST council

Goods & Services Tax Council is a constitutional body for making recommendations to the Union and State Government on issues related to Goods and Service Tax. The GST Council is chaired by the Union Finance Minister and other members are the Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all the States.

The Goods and Services Tax Council shall make recommendations to the Union and the States on—

  1. the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
  2. the goods and services that may be subjected to, or exempted from the goods and services tax;
  3. any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
  4. special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
  5. The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.

How it works?

One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.

  1. Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely: —
    1. the vote of the Central Government shall have a weightage of one third of the total votes cast, and
    2. the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
  2. No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—
    1. any vacancy in, or any defect in, the constitution of the Council; or
    2. any defect in the appointment of a person as a Member of the Council; or
  3. The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute  between the Government of India and one or more States;
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