GST revision only once in 3 months among key recommendations to GST Council
September, 12th 2017
The review of GST rates once every 3 months, a convergence of tax rates to 12% and 18% — are among the new recommendations to the GST Council through a new "approach paper" prepared by the Fitment committee.
The new approach paper suggests fewer chances of rates revision in the next three months as in the past three Fitment committee meetings, a huge number of items have gone through rate changes. For instance, on September 9, rates of over 40 items were reviewed along with the critical car cess that was hiked.
The indications are that rates for goods are in the pre-GST tax era. Now, probably what remains is whether, or not, the policy objectives are achieved.
One of the policy objectives, that has been mentioned very clearly is the simplification of the rates structures. This means either the rates are converged at a single rate of 18% or at lowered down to two rate slabs of 12% and 18%.
Thus, to achieve a single rate, rates should be reviewed once in 3 months instead of every meeting of the Council.
The review of GST rates applies particularly to the 28% tax slab with certain exceptions. Norms will be applicable only for the items of mass consumption or items of public interest or where it's a B2B transaction, in terms of intermediate goods, or a MSME product, or an export-related item. However, the revenue constraints may be taken up for a review.
So far, the GST Council had been following the concept of applying immediate charges on anything that has high-yielding revenues or luxury item or is a sin good.
However, we have to wait and see if this paper is adopted as well as how the council reacts to this in the next meeting, that is on October 24.