Though the businesses are expecting rate cuts amid economic slowdown, it is unlikely that the council will announce any major rate cut tomorrow.
GST council is set to meet tomorrow for the first time after the nationwide lockdown and the council is expected to discuss the revenue shortfall and the compensation to states. Though the businesses are expecting rate cuts amid economic slowdown, it is unlikely that the council will announce any major rate cut tomorrow. Given a high level of uncertainty about revenue flow in the current financial year, the major rate cut will have to be considered by keeping in mind that revenue also needs to be protected, an official told The Indian Express. However, some relief such as a late fee waiver can be given to the taxpayers, the official added.
In the 40th Goods and Services Tax (GST) Council meeting scheduled via video conferencing on Friday, it is also expected that the council may discuss the option of borrowing from the market to meet the compensation requirements arising due to low compensation cess collections. Another major issue related to the inverted duty structure, that is, the output having a lower tax rate than inputs, is also expected to take a front seat in tomorrow’s discussion as it has been discussed in the GST council for a long time now. However, given the uncertain economic conditions, the state government officials said to the paper that now is not a suitable time to undertake any such rate tweaks.
Also Read: India gets more FPI in 10 days of June than full-month foreign investments in last 6 months
“Among others, it is expected that GST council would waive the late filing fees till September 2020, substantially reduce the rate of interest from 18 per cent and 24 per cent, rationalise the tax rate on health care services and COVID items like sanitisers, PPE kits, etc, and allow tax relief in case of bad debts and post supply discounts,” Rajat Mohan, Senior partner, AMRG & Associates, told Financial Express Online. The council may also release priority of budgetary support claims on priority basis to the industrial units, directions to tax officers for limiting the use of coercion during COVID period, and an immediate suspension on non-essential departmental audits, Rajat Mohan added.
Meanwhile, earlier this week, Finance Minister Nirmala Sitharaman had said that any recommendation related to GST rate reduction will go to the council, but, the GST Council is also looking for revenue. Therefore, the decision for a reduction in rate for any sector has to be taken by the council.