Union Finance Minister Minister Nirmala Sitharaman will chair the 38th GST Council Meeting today. An increase in goods and service tax, boost for real estate, rationalisation of tax rates on lotteries, making refund process easier for exporters are some agendas which will be discussed in the meeting today. The council meeting is supposed to review GST and compensation cess rates on various items.
The sources said that the government is planning a temporary cess of 2% on the items falling in the 5% and 18% slabs, to balance the revenue shortfall. The market report also suggests that the GST Council could also increase goods and service tax on jewellery. Amid the speculation of such increase, gold prices have jumped up around Rs. 200 per 10 gram in just two-three days. However, the expert from market says that this move of GST Council will have negative impact on demand of jewellery as gold is already burdened with a 12.5% import duty and a 3% GST.
In the case of long-term leases, the GST Council may consider exempting long-term leases of 30 years or more if provided by a state, or if the central government has a stake of at least 20%. In the case of privately-owned plot, GST council could impose 5% tax on long-term leases. Tax exemption on long-term land leases for setting up industrial units will prove a positive step and encourage investment in manufacturing sector.
The state-run lotteries currently attract 12% GST while those authorized by them and sold outside the state have 28% tax. The council meeting could also consider this variation and take step towards setting high GST rates for lotteries. ‘Lotteries are sin/demerit goods and should be taxed at high rate of GST, at either 28% or 18%’, the agenda of meeting says.
At present, the exporters face some difficulties in getting the refund and disbursal. In spite of the government’s emphasis on single-window clearance system, the exporters have to approach two different authorities for refunds. The issue is expected to be raised in the meeting.
Rs. 1.1 lakhs crore monthly GST collection has been made target for the remaining four months of 2019-20 financial year by the finance ministry. During the April-November period of 2019-20, the central GST collection fell sort by nearly 40 per cent of the Budget Estimate. Ahead of the meeting, the Center has released Rs. 35,298 crore as compensation to states and Union territories to make up for the loss of revenue.
The Finance Minister had even in last week sought suggestions for shoring up GST revenues from various states on items currently under exemption.