GST Council Meeting LIVE: What will become costlier, what will be cheaper ahead of Budget 2024 – Economy News

In May collections were:

-Central Goods and Services Tax (CGST): Rs 32,409 crore

-State Goods and Services Tax (SGST): Rs 40,265 crore

-Integrated Goods and Services Tax (IGST): Rs 87,781 crore. This included Rs 39,879 crore on imported goods as well.

Apart from this Rs 12,284 crore cess was collected and this included Rs 1,076 crore on imported goods. Overall the gross GST collections for FY25 till May is at Rs 3.83 lakh crore. A boost in domestic transactions and higher imports helped in clocking this 10% plus growth on a YoY basis in May.

According to the latest data released by the Ministry of Finance, Goods & Services Tax (GST) collections during May came in at Rs 1.73 lakh crore, recording a growth of 10 per cent year-on-year. Though GST collection in May was a tad lower than April it recorded a steady growth. GST collection had breached the Rs 2 lakh crore milestone in April. The gross GST collection during April had hit a record of Rs 2.10 lakh crore, up 12.4 per cent on-year.

The GST Council meeting is set to begin soon and most experts we spoke on the expectations from the 53rd GST council meeting highlighted three key aspects-

1. Simplifying GST framework

2. Looking at ways to enhance compliance

3. Pay heed to industry concerns

According to Ankur Gupta, Practice Leader – Indirect Tax, SW India, “One major area of discussion will likely be rate rationalization, potentially involving reductions in GST rates for specific goods and services to stimulate consumption and provide relief to businesses. Additionally, efforts may be made to correct the inverted duty structure, which currently leads to input tax credit accumulation issues in certain sectors.”

He further stated that in terms of compliance simplification, proposals may include streamlining the GST return filing process by allowing amendments in case of incorrect reporting in GSTR in the same month. Further, there could be discussions on simplifying the ITC claim process. In terms of a tribunal set up, Ankur Gupta added that there may be discussions on pre-deposit, finalising SOPs and timelines for filing pending appeals.

Most restaurants fall under the 5% GST rate. In this case one does not have the option to claim ITC or input tax credit (ITC). The 18% GST rate has a provision for ITC claims. The rate is mostly dependant on the location of the restaurant.

Meanwhile restaurants listed under the food apps pay a uniform GST rate of 5% on the bill. Food delivery aggregators though delivery commissions and marketing services which fall under the 18% GST slab.

The current GST on personal vehicles range between 5-12%. On an average, 5% GST rate is applicable on carriages meant for specially abled. This includes both motorized/non-motorized and also on the parts/accessories of these carriages. This rate came into effect after the decision of 31st GST Council Meeting in 2018.

Meanwhile 12% GST rate is applicable on EVs, vehicle powered by hydrogen fuel cell tech and hand propelled vehicles including rickshaws.

28% GST is applicable on Motor vehicles but the cess differs from engine capcity and length of the vehicle.

The 53rd GST Council meet is set to kick off in a few hours from now. In terms of agenda and expectations, it is seen as a key meeting with a host of issues on which decision is expected. The first GST Council Meet after the Modi 3.0 Cabinet was sworn in is set to consider-

1. Taxability of corporate guarantees

2. Taxation on online gaming

3. Possible tax structure for share reimbursement by companies as ESOPs, ESPPs, and RSUs.

GST on online gaming is expected to take centre stage today. But another sector that has been continuously highlighted is GST on automotive. The average Passenger cars generally fall under the 28% GST bracket. But there are separate cess range depending on engine capacity and length of the cars.

In general cess for cars range between 1-22%. According to the 37th GST Council meet, the cess on 1200cc and 1500cc vehicles ranges between 1-3%. However this applies to cars with length up to 4000mm or passenger capacity of 10 or less persons to less than 13 persons.

The GST rate on EVs has been decided at 5% as per the 36th GST Council decision. However, EV components carry a GST rate of 18%. Even Lithium Ion batteries if bought separately have 18% GST rate.

“One of the key strengths of the GST law for related party transactions has been the flexibility in valuation methods. As long as the recipient claims full input tax credit (ITC), companies can choose any valuation method that suits their needs. This provision has significantly eased compliance burdens across industries, both for domestic transactions and imports of goods.

However, an ambiguity persists regarding the applicability of this flexible valuation method to import of services. Uncertainty exists around whether companies can leverage this benefit when importing services from related parties.

To ensure consistency and streamline compliance for businesses, it is recommended that the GST Council address this ambiguity in its upcoming meeting. Specifically, the Council should clarify that the existing dispensation for related party transactions also applies to the import of services. This will eliminate confusion and allow businesses to utilize the full potential of the flexible valuation framework under GST.”

According to sources, the government is likely to consider a review of the 28% GST levy on the full face value of bets by online gaming companies. In July and August last year, the Council approved amendments to the GST laws to include online gaming, casinos, and horse racing as taxable actionable claims. During that time, it was mentioned that a review of this implementation would be conducted after six months (April 2024), but that didn’t take place.

Currently, the online gaming industry is facing around Rs 2 trillion tax liability, which they have challenged in court. The Supreme Court is likely to hear their petitions in July.

Experts say that the GST Council faces two options: first, to refrain from taking corrective measures while the matter is sub-judice and await court directions; second, to immediately correct the disputed decision by removing the retrospective application of the 28% GST.

The GST Council will meet today and will discuss proposals to bring natural gas and aviation turbine fuel (ATF) under the ambit of the GST, and a review of the way the tax on consumption is applied on online gaming, casinos and horse racing. Industry is looking at discussions during the GST Council meeting on the revival of a plan to restructure the complex multiple-rate tax structure, with GST revenue having already risen significantly.

The 52nd GST Council meeting was held on October 7, 2023, and was presided over by Union Finance Minister Nirmala Sitharaman. The GST Council had, during the meeting, announced the imposition of 28% levy on online gaming, casinos, and horse racing. Later in the March GST meeting, the council had postponed the review of the levy imposed on the proceeds from online gaming.

The Finance Minister will preside over the 53rd GST Council meeting on June 22, 2024.

The GST council uses a consensus-based decision-making process when making decisions during meetings. Encouraging the spirit of cooperative federalism, the GST council makes decisions with a majority of at least three-fourths of the weighted votes of the members present and voting. One-third of the total votes cast go to the Center, and two-thirds of the total votes go to the States.

The GST system is divided into two parts. The Central Government levies the Central GST (CGST) and State governments levies the State GST (SGST) concurrently. On imports and interstate supplies, there is also an additional tax known as the Integrated GST (IGST), which is distributed to the destination state but collected by the Central Government.

GST laws were implemented on July 1, 2017, replacing a complex web of Central and State taxes. Under the Indian GST, goods and services are categorized into different tax slabs, including 5%, 12%, 18%, and 28%. Some essential commodities are exempted from GST, Gold, and diamond job work attracts low tax rates. A compensation cess is being levied on demerit goods and certain luxury items.

The GST Council Meeting will start today. The government had announced the date of the meeting as June 22, just a day after Nirmala Sitharaman formally assumed charge as Union Minister of Finance and Corporate Affairs. “The 53rd meeting of the GST Council will be held on 22nd June, 2024 at New Delhi,” the official handle of GST Council on X, had stated.