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GST Council meeting: Rate tweaks unlikely; compensation, falling revenues on the agenda

Officials said some compliance-related exemptions, such as late fee waivers for taxpayers, are also expected to be discussed, even with any major rates unlikely to be rational.

The COVID-19 pandemic-generated states and revenue reduction are important discussions expected at the 40th Goods and Services Tax (GST) Council meeting via videoconferencing on Friday. Officials said some compliance-related exemptions, such as late fee waivers for taxpayers, are also expected to be discussed, even with any major rates unlikely to be rational.

The Council is expected to discuss the option of availing loans from the market to meet the indemnity requirements arising out of reduction in compensation cess collections. The proposal was also discussed in the last Council meeting held in March, in which the legal status of the GST Council was discussed so that the body could take any such loan and hence no final decision was taken. Any item that is facing the inverted duty structure, which means that output with lower tax rate than input will also be taken care of, although state government officials say it will be able to keep any Time is not appropriate to increase the rate. Uncertainty.

“There is a high level of uncertainty about revenue flow in the current fiscal year, so any major rate has to be considered, keeping in mind that revenue also needs to be protected,” said an official.

On Monday, on the need to reduce GST rates in badly affected areas, Finance Minister Nirmala Sitharaman while addressing a webinar with members of FICCI said, “GST rate reduction will go to council. But, the GST Council is also looking for revenue. The rate reduction for any area is to be decided by the council. ”

The GST Council is expected to consider a late filing fee waiver for returns from July 2017 to January 2020. Along with this proposal, proposals for some other compliance related relief measures are also expected. The government had already waived late fees for filing GSTR-3B returns for February 2020 – May 2020.

The total GST collection has slowed to Rs 12.2 lakh crore in GST revenue in FY 2020 with a growth of only 3.8 percent. In this perspective, states are guaranteed compensation for any revenue loss by 2022 if they fall short of the 14 percent annual increase since the GST rollout in 2017.

The protected revenue in the current fiscal states was estimated to be Rs 63,720 crore per month from Rs 55,900 crore in FY15. Last week, the central government released a pending compensation payment of Rs 36,400 crore for November-February for the states 2019-20.

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