The GST Council is set to meet on September 3-4 to discuss the revised rate structure. During this meeting, the GST Council is expected to consider a host of recommendations from the different Groups of Ministers. The discussions are also set to mull the two-rate GST structure in line with the government proposals.
The Group of Ministers had proposed scraping the 12% and 28% GST and going ahead with the 5% and 18 per cent GST rates. Though some media reports indicate that the GST rates could possibly be implemented in September around Navratri, a final date is expected after the GST meeting.
One of the key considerations is that a delay in the implementation of the revised GST rates may impact the upcoming festive sales, especially auto sales. According to a CNBC TV-18 report, the automobile industry is concerned about the delay and has requested the government to expedite the implementation.
Centre pushing for early GST implementation
According to a CNBC TV-18 report, the central government may push the GST council to approve the GST rates with an immediate effect in the upcoming meeting on September 3 and 4.
According to a CNBC-TV18 report, the Centre is also taking into consideration concerns about the states taking a revenue hit as a result of lower GST rates. The report states that the centre is working to address the concerns of the states as well.
GST rate structure: Main concern
The automobile industry has also requested the government to implement GST rates in time to align with the festive season. Navratri begins on September 22, and the festive season between Navratri and Diwali is seen as a key period to boost sales. Any delay in GST implementation beyond the festive period could delay buying decisions by customers. This could then negatively impact the festive season sales, as per industry stakeholders and brokerage reports.
As per Nomura’s report last week, customers could be delaying new car buying in anticipation of the possible GST rate cuts and waiting for the implementation before buying their next vehicle.
Nuvama too stated that the customer enquiries in the automobile industry were healthy, but new bookings fell sharply. The report pointed out that the buyers have adopted a ‘wait and watch approach till the government announces the final GST rates for the auto sector.
Procedural issue resolution
As per the report, the automobile industry has also approached the government to resolve the procedural issue as well as the government announce new GST rates. The industry has sought to resolution of input tax credit-related issues.