The Centre will conduct negotiations on the Goods & Services Tax (GST) structure after presenting Budget 2020, reports Mint. Finance ministers from the Centre and states will reportedly discuss an overhaul of the GST slabs and rates. Officials will also discuss methods to stem the shortfall in revenue collection and GST compensation to states for the next fiscal, a source told the paper. A rate hike on items such as perfumes, cosmetics and vacuum cleaners, which were recently moved from the 28 percent slab to the 18 percent slab, may be discussed in future, the report added.
Moneycontrol could not independently verify the story. The Centre and some states have been locked in a tussle over payout of GST compensation cess. “It is easy to say states’ revenue loss should be met, but when there is not enough revenue, what is to be done? Now, there is a recognition among all that these issues need to be discussed,” the article quoted an official as saying. The Centre is expected to face a shortfall of Rs 63,200 crore in GST compensation cess collection, according to a separate media report. Two days before the GST Council’s meet on December 18, the Centre had released Rs 35,298 crore to states and Union Territories as compensation cess.
Fifteenth Finance Commission (FFC) Chairman NK Singh recently highlighted the need to simplify the GST structure. The Budget will most likely include the recommendations of FFC, which submitted an interim report to President Ram Nath Kovind and Finance Minister Nirmala Sitharaman earlier in December, the report stated. The Centre wants states to take a cut in their compensation dues, which is currently at 42 percent, a move that states have opposed. A similar suggestion made by the FFC in September did not get a favourable response from states. Resolution of the issue between the Centre and states will have a bearing on the final FFC report for five-years ending FY26.