GST Council ready to meet; here’s what’s on the agenda

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BENGALURU/NEW DELHI : The GST Board should grant additional time for officials to demand tax assessments and for businesses to seek refunds for past years in view of the disruptions caused by the pandemic. The Board may also revise tax rates on certain items such as paraphernalia used by cancer patients, imported defense articles and tetra packs.

The Council is also likely to clarify the taxation of several service sectors such as ice cream parlors, cable car travel and the rental of transport vehicles, in accordance with the Council meeting agenda, reviewed by TUSEN. The Center and the states will also consider several rule changes intended to improve tax compliance at the Council’s two-day meeting starting June 28.

An extension of time to request contributions and tax refunds is proposed given the disruptions linked to covid which have slowed down the procedures. The law currently allows a tax officer to demand any tax that has not been wrongfully paid or refunded within three years from the due date for filing the annual return. The plan is to give time until the end of September 2023 to increase tax requests for the 2018 fiscal year. Without this change, officials would have only had time until the beginning of February 2023 to issue requests for the tax year. fiscal year 2018, as the extended due date for filing the annual report was February 2020. Also, the period between March 1, 2020 and February 28, 2022 will be excluded. the calculation of the limitation period for companies to request tax refunds, as well as for tax inspectors to issue requests in the event of erroneous refunds.

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With a planned major overhaul of tax rates and slabs postponed due to a spike in inflation, state government fiscal issues and measures to make the GST system more efficient are expected to take center stage. of the GST Council meeting. The Council is expected to adopt proposals to remove tax exemptions and fix the reverse duty structure, in addition to considering proposals from a ministerial group that has recommended stricter application and a GST-led registration process. through data analysis.

The Board is likely to consider changes to GST rates on items for which a so-called assembly panel has recommended revisions. He suggested that a group of ministers on rate rationalization should consider raising the GST rate on cut and polished diamonds from 0.25% to 1.5%. The panel argued that a reduced rate on cut and polished diamonds caused a reversal of duties and a freeze on tax credits for the gemstone and jewelry industry.

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The panel proposed lowering GST rates to 5% from 12% currently on ostomy appliances, including the pouch to collect body waste, which is used by cancer patients. It also recommended a uniform rate of 5% for orthopedic implants, braces and artificial limbs.

“The way to increase revenue is to block flights. The focus will be on sealing leaks. With that, you will have so much income that we could even lower the rates. It is the inefficiency of the administration if the receipts are not sufficient. Raising prices is not the solution. Have an honest tax system, low rates and higher incomes,” a finance minister said on condition of anonymity.

Experts have expressed hope that the focus on compliance does not affect honest businesses. “Companies are hoping that the pressures on state revenues due to the proposed end of GST compensation will not lead to increased audits on compliant taxpayers,” said MS Mani, Partner at Deloitte India.

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The committee also recommended that the basic customs duty and built-in GST exemption on certain defense articles could be extended to imports by private entities, provided that the end user is the defense forces. Currently, this exemption is only available for imports made by the armed forces and public companies.

The GST rate on tetra pack could be raised from 12% to 18% to put it on par with other packaging like cartons and plastic bottles which attract 18% GST, if the recommendations are approved by Council .

“Regarding the GST structure initially, it was expected that there would be very few exemptions as they distort the value chain. Therefore, any decision to remove or reduce exemptions would be consistent with the GST architecture as originally envisioned,” Deloitte’s Mani said.

Emails sent to the Ministry of Finance and the GST Council secretariat on Wednesday went unanswered as of press time.

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