The Goods and Services Tax (GST) Council will take up a slew of recommendations from the rates fitment committee, including slashing of the tax on fortified rice kernels, and a 22% cess on all utility vehicles (UVs), on Saturday.
According to sources, the fitment committee has recommended slashing the GST on supply of all fortified rice kernels, including that for use in PDS/welfare schemes, to 5% from 18% at present, and the tax on raisins (which are not pre-packed) to nil from 5%. “The request from industry was for nil rate for fortified rice kernels other than pre-packaged and labelled ones, and a 5% rate to apply on prepackaged and labelled items,” said a source.
Separately, the 33-member Centre-state body may deliberate on the possible inclusion of aviation turbine fuel (ATF) under the ambit of GST. Currently ATF attracts 11% central excise duty, and value added tax (VAT), which varies across states. Most of the states impose VAT on ATF between 1-5%, and only a few–Bihar, Tamil Nadu, West Bengal, Delhi, and Assam–impose the tax at higher rates of 20-30%.
“The Council is likely to discuss the issue, but may not take a decision at the moment,” said another source. In the recent years, the Centre has garnered annual revenue over Rs 2,000 crore from excise duty on ATF.
The fitment committee has recommended the Council to exempt imports of several ‘sub-items’ of long-range surface to air missile systems (LRSAM) from Integrated GST (IGST) levy. Currently, exemption from basic customs duty (BCD) and IGST is available on imports of long-range surface to air missile systems (LRSAM). But the ministry of defence has made a request for amendment of this entry to include “systems, sub-systems, equipment, parts, sub-parts, tools, test equipment, software meant assembly/manufacture of LRSAM system”, said the source.
Additionally, the fitment committee has suggested reducing the GST on sale of old and used electric vehicles to 5% from 12% currently. Old and used petrol/diesel/CNG vehicles exceeding engine capacity of 1500 cc attract 18% GST during sale.
Also, the committee has recommended the Council to clarify that all utility vehicles (UVs) will attract a 22% compensation cess during sales, effective from July 26, 2023. “It has been represented that there are different views in some jurisdictions regarding the effective date of (the relevant) amended entry,” said a source.
In the 50th Council meeting, held on July 26, the Council had recommended that 22% cess will be applicable to “all motor vehicles known as utility vehicles by whatever name called, with engine capacity exceeding 1500cc, length exceeding 4000 mm and ground clearance of 170 mm & above.” Prior to this, only sports utility vehicles (SUVs) attracted the cess.
FE had reported earlier that the Council is expected to take up the Group of Ministers’ (GoM) report of rate rejig of about 150 items for discussion in the Saturday meeting. Sources say, the rate rationalisation exercise–hiking rates on some items, while reducing on others–is expected to fetch Centre & states an additional revenue of around Rs 22,000 crore per annum.