GST exemptions on some items set to be removed

With the Goods and Services Tax (GST) Council accepting the recommendations of a panel of state finance ministers on Tuesday, a variety of unbranded food items in addition to hotel rooms with a tariff below $1,000 per night and hospital rooms with a daily tariff over $5,000 are set to become taxable. These items include packaged curd, lassi, buttermilk, foodgrains, cereals, honey, papad, and a host of other items.

According to those with knowledge of the discussions, no deadline has been set for implementing these recommendations. Currently, these items are GST-exempt. On tougher examination and verification of high-risk taxpayers, the council also approved the proposals of another ministerial panel. On the first day of the two-day GST Council meeting being held in Chandigarh, these decisions were made.

GoM Term may be Extended

The execution of these suggestions from the two groups of ministers (GoMs), one on rates and the other on GST system improvements, is anticipated to be covered by the council as it continues its deliberations on Wednesday. In order to complete its report on rejigging slabs, the council is also expected to prolong the duration of the GoM on rates by an additional six months.

In addition to hearing aids, educational institutions, incense sticks, utensils, tractors, and agri-related gear, the GoM has suggested that some everyday commodities including bread, incense, and utensils continue to be exempt from the GST. The Reserve Bank of India (RBI) and the Securities and Exchange Board of India’s (SEBI) tax exemption on services was suggested to be phased out over time (Sebi). It also advocated for eliminating the GST exemption for checks, whether they were loose or in a book, and supported an 18% GST rate.

The GoM on GST system reforms, led by Maharashtra’s finance minister Ajit Pawar, is said to have recommended stricter scrutiny and verification of high-risk taxpayers as well as the requirement that electricity bills be presented when registering. The council is also said to have accepted these recommendations.

The GoM also recommended that the National Payments Corporation of India certify taxpayers’ bank accounts and make information on unregistered fraudulent traders publicly available (NPCI).

GST Council Meet Updates

Enhancing the NAA

The National Anti-Profiteering Authority (NAAtenure )’s was also up for discussion by the GST Council after November of this year. One of the participants stated that it was also in favour of the solicitor general providing assistance in cases where the constitutionality of NAA was contested.

The council has resolved to do a thorough evaluation of the NAA’s mission in order to strengthen it. According to those with knowledge of the conversations, the majority of the states concur that the NAA’s role is essential and that its term needs to be extended.

Compensating states

The council also talked about the request for reimbursement beyond June 30 made by a number of states. For a period of five years, beginning on June 30, the Center had pledged to reimburse states for any revenue losses resulting from the implementation of the GST. There is still no agreement on whether to increase remuneration, according to another person, and talks will probably resume on Wednesday.

According to the source, the council has permitted states to issue e-way bills for the intra-state transportation of gold and precious stones.

It is also rumoured that the GST Council has requested the GoM to prepare a report on a comprehensive structure for the GST tribunals after referring the issue of their establishment to that body.