The GST Council is set to meet today after an eight-month hiatus, and this meeting holds significant importance as it is the first under the third term of the NDA government.
The meeting is expected to address several key issues related to indirect taxes, aiming to strengthen and simplify the tax system. Given that this meeting is taking place just before the full budget, it has garnered considerable attention. Here are five crucial issues that are likely to be discussed and potentially decided upon in today’s meeting.
1. Expansion and Changes in GST Scope
One of the major topics on the agenda is the potential approval of legislative amendments in Central, State, and Integrated GST laws. A key focus is on excluding Extra-Neutral Alcohol (ENA), a primary component in the production of alcohol, from the ambit of GST. This would mean that ENA remains subject to state-level excise duties and Value Added Tax (VAT). This move is seen as a way to clarify the tax structure for the alcohol industry and avoid overlapping tax jurisdictions.
2. Taxation of Online Gaming and Telecommunications
The Council is also expected to discuss the taxation of online gaming, including the services related to it and corporate guarantees. Additionally, there is a proposal to tax the spectrum fees paid by telecommunications companies. This discussion could lead to significant changes in how these rapidly growing sectors are taxed. The Council might also deliberate on whether to exclude fertilizers from GST to correct the inverted duty structure and make it more equitable. Another possible topic of discussion is the inclusion of petroleum products under GST, a move that could have widespread implications.
3. Simplifying Tax Procedures and Litigation Relief
Another anticipated proposal is to introduce a new provision in the GST laws that would allow tax authorities to close accounts on an "as-is-where-is" basis without additional demands, recoveries, or refunds in certain cases. This change is expected to reduce litigation and disputes, particularly in the alcohol industry. If approved, these proposals would be included in the Finance Bill to be presented in Parliament next month.
4. Enhancing Ease of Doing Business
To further improve the ease of doing business, several steps are being considered, including reducing the amount taxpayers need to deposit when challenging administrative decisions in the GST Appellate Tribunal. Currently, the law specifies a deposit amounting to 10% of the tax demand, and the proposal suggests reducing this percentage to make it less burdensome for taxpayers. The meeting is also likely to provide additional clarifications on the taxation of corporate guarantees and other issues arising from court cases.
5. Strengthening GST Registration System
The Council is exploring ways to enhance the security and verification processes for GST registrations. By integrating data from various central and state agencies, the aim is to prevent tax credit misuse and detect tax evasion more effectively. Strengthening the verification of individuals seeking GST registration would help in mitigating instances of tax fraud. Leveraging technology and data analytics has already significantly aided officials in curbing tax evasion, and further measures in this direction are expected to reinforce these efforts.
The upcoming GST Council meeting is poised to be a pivotal one, with several significant decisions on the table that could impact a wide range of sectors. From changes in GST scope and taxation on new-age industries to measures aimed at reducing litigation and enhancing the ease of doing business, the outcomes of this meeting are eagerly awaited by industry stakeholders and policymakers alike.
As the government seeks to streamline the GST framework and address ongoing challenges, the proposed amendments and discussions signal a move towards a more efficient and transparent tax system in India.