As the Goods and Services Tax (GST) Council meets at Hyderabad today (Saturday), it will have a big agenda on the table, including determining the quantum of additional cess enabled by a recent ordinance on “luxury cars” and SUVs and identifying the vehicles that would be subject to the impost. At its 21st meeting, the powerful body of the Centre and states may also bring down the GST rates on a clutch of daily-use items and review the tax collection figures and returns-filing process.
As per the ordinance to amend the Goods and Services Tax (Compensation to States) Act, 2017, the council is empowered to raise the ceiling of the cess leviable on “motor vehicles falling under headings 8702 and 8703 including SUVs, to 25% from the present 15%”. Although it is unclear if the council will use the entire additional space for the cess hike provided by the ordinance, automakers are keenly watching this and also which among their bevy of products will suffer the extra cess.
Additionally, the revenue department will apprise the council of the taxes collected under GST for July as well as issues related to return-filing faced by taxpayers. So far, nearly 70% of the eligible 60 lakh taxpayers have filed the returns for July. About `95,000 crore has been garnered as July GST revenue, which will be disbursed among the Centre and states in a roughly 50:50 ratio.
As reported by FE earlier, due to big businesses’ failure to upload sales invoices promptly, taxpayers have faced technical issues in filing the invoice-based returns for July.
Separately, the GST Council is likely to discuss state tax departments’ issuing orders that are in conflict with rules approved by the body, and the way to deal with such directives. As FE had reported in August, Haryana’s tax department had asked its officials to conduct physical verification for all GST registrants. This order was in direct contravention of the non-intrusive registration rules approved by the council.
The council, sources said, might also bring amendments to the relevant rules to thwart the practice of registered cereal brand owners de-registering the brands to avail of zero GST benefit. The tax treatment of branded and unbranded grains under GST has created a curious situation where some of the leading companies escape the tax while others pay a tax of 5%. The fitment committee has now recommended that any brand that was a registered one on May 15 will be deemed to be registered, even if was subsequently de-registered.
The fitment committee has recommended that the GST rate for dried tamarind be brought down to 5% from the existing 12%. This item consumed by common people was VAT-exempt in some states in the pre-GST period. Also, the committee has sought a reduction in rates for roasted grams to 5% from 12% as the process involves only roasting, and it is used for making “sattu flour” which attracts 5% GST. The rate for custard power could also come down to 18% from 28% as it is used by lower- and middle-income families.
The council will also consider lowering the rates for idli and dosa batter to 12% from 18% currently. The reduction has been sought on the grounds that these batters are wet mixes of cereal and leguminous vegetables, which are taxed at nil GST rate.
Besides, GST on corduroy fabrics is sought to be lowered to 5% from 12% currently and the same is to be done for saree falls. The fitment committee has also recommended that brooms and toothbrushes be tax-free against 5% GST levied currently while rosaries and prayer beads be charged 5% tax compared with 18% now.