Some Highlights of GST Council Meeting

Some Significant Highlights of GST Council Meeting

No reduction in man power under new GST regime

The use of technology and transfer of excise and service tax to states under new framework of GST caused worries among many CBEC officers. They suspect that under new GST regime, there will be reduction in manpower and they might lose their jobs. To dispel the worries, Finance Ministry has assured the CBEC officers that there will be no reduction in manpower and the new HR policy will be drafted after taking view of the Board.

The association had earlier planned to hold a dharna on 14th Oct but after the GST council meeting on 23^rd September, it was decided by the Ministry that the Centre will continue to assess 11 lakh service tax assessees in the new dispensation and when the states get expertise, the new tax assessee will be shifted to them. After this assurance from the board, the association has decided to shelve the plan.

However, in second meeting on 30th September, some states disagree with the arrangement and the final decision on the issue will be called in the next meeting that is going to be held on 18-20 Oct.

Sin Tax of 40% on Tobacco Products

In a year, a million of people die due to tobacco related diseases and it also causes 2-3 lakhs cases of oral and throat cancers every year. India, being the second largest user of tobacco in the world, its 35% of adult population is consuming it.

As per WHO articulation, the direct and most effective way to reduce the consumption of tobacco is by increasing the prices, through taxes. Higher the tax rate, more likely is less consumption of tobacco by the vulnerable population such as youth, pregnant women and low income smokers.

Almost 21 % of total national health expenditure is attributed to tobacco and it is putting pressure on both GDP and existing health facilities.

This is proposed to GST council to levy a sin tax of 40% on all forms of tobacco related products such as cigarettes, beedis, and smokeless tobacco and pan masala in order to discourage the consumption and addiction amongst India population.

“GST – Who wins and who loses?”

Issues to be discussed in GST council Meeting held from 18^th – 20^th Oct

• Whether or not, the Centre will retain the power to assess 11 lakhs service tax filers under the new dispensation?
• Compensation alternative to be finalised from the following

1. A state will be compensated if the revenue under GST falls short of the average tax earning in the best three years out of past five years, or
2. Out of five years, two outliers are left and the average is taken. If the revenue falls short, then the state gets compensated, or
3. A base year will be fixed, most likely it would be 2015-16 and a particular growth rate will be decided. If the revenue falls short, then the state gets compensated, or
4. States get compensated on fixed rate of revenue

• What will be the standard rate of tax under GST for normal products and services, low rated goods and luxury and injurious products and precious metals?

Issues already discussed in previous GST Council Meeting

• Rules and regulations for registration, refunds, payments, returns and invoices.
• Traders having annual revenue up to 20 lakhs shall remain out of the new tax regime.
• Resolved issue regarding dual control over small traders and decided to give exclusive control to state over all the dealers having annual revenue up to rupees 1.5 crore and for the traders above 1.5 crore a mechanism will be yet to be worked out.