GST Council to review tax rates, exemptions

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Federal indirect tax body, the Goods and Services Tax (GST) Council, will meet later this month to discuss various revenue-raising measures including changes to GST rates and cess levied on select goods. The council meeting which is expected in the second half of December will be its first meeting ever in which tax rate increases will be considered seriously. At the last meeting of the council in September in Goa, there was a token increase in the tax rate on one product, signaling that the era of GST rate reductions was over. The move to review tax rates, exemptions, and the cess comes amid a shortfall in revenue receipts of the union and the state governments and the latter accusing the Centre of delays in giving them their GST compensation. The proposed meeting will also consider ways to improve compliance.

The GST Council has asked officials from states to come up with suggestions and proposals by Friday on GST rates, the cess on various products and on exempted items, all of which will be reviewed at the next meeting, said an official privy to discussions between the Union and state governments. The council has also expressed angst over the shortfall in revenue receipts and has highlighted that proceeds from the cess levied on items like tobacco and automobiles will not be sufficient to compensate states for their revenue shortfall.

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