New Delhi: A meeting of the Goods and Services Tax (GST) Council is underway currently amid expectations of non-luxury items being moved from the 28% slab to the 18% one as indicated by Prime Minister Narendra Modi earlier this week.
However, some states want the proposed move’s impact on revenues to be fleshed out in greater detail before levies are lowered, moneycontrol.com reported. A consensus between the GST Council and states on the issue also seems unlikely given the recent Assembly elections in which the Congress wrested power from the BJP in Rajasthan, Chhattisgarh and Madhya Pradesh.
Days before the meeting, Modi heightened hopes of a rate cut, saying his government wants to ensure that '99 per cent things' attract sub-18 per cent GST slab. He indicated that the 28 percent slab of GST would only be restricted to a few select items, such as luxury goods.
"Today, the GST system has been established to a large extent and we are working towards a position where 99 per cent things will attract the sub-18 per cent GST slab," Modi said.
On Saturday, the GST Council, which is headed by Union Finance Minister Arun Jaitey, is also likely to discuss the revenue position of the Centre and states, easing refund-related rules for exporters. It is also expected to take up the issue of transferring ownership of the IT framework GST Network in a government-owned company, a proposal that was approved by the Cabinet in September.
There could also be discussions on reducing cess on plug-in hybrid cars, which currently falls in the 28 percent tax slab.
A range of goods from air conditioners to dishwashers, from television sets to digital cameras could become cheaper if the GST Council slashes rates to 18 percent on all products in the 28 percent slab, except demerit goods, cement and automobiles.
Over 1,200 goods and services fall into four broad tax slabs — 5, 12, 18 and 28 percent. Currently, there are close to 40 goods and services in the 28 percent slab, which comprises demerit and luxury goods, among other items.
If implemented, the move will be viewed in political circles as an attempt to woo the middle class months ahead of 2019 Lok Sabha elections.
The opposition has already questioned the PM’s statement hinting at a rate cut. Accusing Modi of undermining the constitutional authority of the GST Council, West Bengal Finance Minister Amit Mitra said the PM has pre-empted the decision-making authority of the Council.
Mitra said that West Bengal government had been demanding a reduction in the GST rates on essential items from 28 per cent to 18 per cent and from 18 per cent to 12 per cent. “It is surprising that the prime minister is now demanding what we had urged the Union government to do long time back. If our demands were met a year back, some of the negative effects of the faulty GST could have been avoided and the economy could have been saved,” Mitra said.
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