Federal indirect tax body, the Goods and Services Tax (GST) Council, is set to meet in Goa on Friday amid demands from the industry for a fiscal stimulus. Here are the five things to expect from the meeting to be chaired by union finance minister Nirmala Sitharaman.
1) Tax rate cut on luxury hotels
The Council is expected to cut tax rates on hotels that charge room tariff of ₹7,500 or more per night and currently attract 28% GST. With the government keen to promote the tourism industry and help generate more jobs, a tax rate cut on luxury hotels is top on the agenda. Prime Minister Narendra Modi in his Independent Day speech too had suggested promoting tourism was on the government’s agenda. State finance ministers are in support of the move as a tax cut on luxury hotels is unlikely to impact overall GST receipts.
2) Tax cut on outdoor catering services
Many experts have suggested that while the GST Council has, in several rounds, reduced the tax burden on products, the same has not happened in the case of services. The Council will consider a rate cut on outdoor catering services which employs semi-skilled or unskilled labour.
3) Single rate for lottery tickets
Taxation of lottery tickets has been a contentious issue with two rates applying to this sector 12% on lotteries sold within the organizing state and 28% on those sold outside. This, industry representatives say, has hit sales. The huge difference in the tax rate on the same commodity acts as a tariff barrier for smaller states such as Goa, Sikkim, and Arunachal when their tickets are sold in other bigger states, including West Bengal or Kerala, they say.
4) Compliance relief for small businesses
The Council is expected to consider proposals for giving compliance relief to small businesses by exempting them from filing annual returns for the first two years of GST FY18 and FY19.
5) Discussion on the extension of GST cess
With the economic slowdown affecting GST revenue collection, states have suggested that the central government borrow from the market and compensate them for their revenue loss and extend the GST cess on select products like automobiles and tobacco beyond 2022. The proceeds from the cess are used for making good states’ GST collection shortfall for the first five years of GST. States’ demand will be discussed at the Council but a final call may take further deliberation.