A ministerial panel on Wednesday mooted GST reduction on ethanol from 18 per cent to 12 per cent but did not favour imposing cess on sugar as arrears to cane farmers are already declining.
The Group of Ministers (GoM), headed by Assam Finance Minister Himanta Biswa Sarma, will also wait for Attorney General’s opinion before taking a view on whether cess can be levied at all under the current Goods and Services Tax (GST) regime, according to officials.
In case AG’s opinion is favorable, GoM may look at the option of levying 1 per cent agriculture cess on luxury goods which could imposed to deal with any unforeseen circumstances in the farm sector.Meanwhile, the GST Council may consider reduction in tax rates on host of items with low revenue implications as part of the tax rationalization exercise in its next meeting on July 21. The items which could be considered for cutting of tax rates might include sanitary napkins, handicrafts and hand loom goods, besides certain services.
Several industry bodies and stakeholders have been demanding duty cut on items, especially those linked to general health and employment generation in unorganized sector.“The Council will take up the issue of rationalization of taxes on various commodities in view of demand raised by stakeholders. It would focus mainly on those items which are of general consumption, and have low revenue implication,” an official said.
The GST Council in its last meeting in May had constituted the GoM to look into the food ministry’s proposal of imposition of cess of up to Rs 3 per kg on supply of sugar over and above 5 per cent GST rate.
India can’t have single rate GST: Subramanian
Ruling out a single rate GST, Chief Economic Advisor Arvind Subramanian on Wednesday pitched for a three rate structure going forward as revenues stabilise. He said GST is a “work in progress” and there is a need for further simplification of rates with fewer exemptions and simpler policies. “In India, we can never have one rate. I had recommended a standard rate and one for demerit good, one for low rate. I think, in India, the debate should be about ‘why can’t we have three’, rather than ‘why not one’,” Subramanian said at an NCAER event here.
Under the GST regime, there are four rates — 5 per cent, 12 per cent, 18 per cent and 28 per cent. Luxury and demerit goods are subject to cess on top of the highest slab.