Panel also accepts proposal to remove the 12 and 28 per cent tax slabs; the Centre has also proposed a 40 per cent rate for five to seven select goods
FM Nirmala Sitharaman (extreme right) chairs a meeting of the Group of Ministers on GST reforms. Pic/PTI
A panel of ministers from different states on Thursday in principle approved the Centre’s proposed sweeping GST reforms through rate cuts, but some opposition-ruled states wanted to know the revenue loss from the move and how that would be bridged. The Group of Ministers (GoMs), headed by Bihar Deputy Chief Minister Samrat Choudhary, discussed the Centre’s proposal of reducing the number of slabs under the Goods and Services Tax (GST) to 2 (5 and 18 per cent) from 4 (5, 12, 18, and 28 per cent). The Centre has also proposed a 40 per cent rate for five to seven select goods.
Recommendations of the six-member panel, which has three members from BJP-ruled states of Bihar, Uttar Pradesh and Rajasthan, and an equal number from opposition-ruled states of Karnataka (Congress), Kerala (Left Front) and West Bengal (TMC), will go to the high-powered GST Council, which will take the final call on the reforms.
“The GoM has decided to accept the two proposals of the Centre,” Bihar Dy CM Choudhary said. “The proposal of the Centre to remove the 12 and 28 per cent slabs was accepted, and we have given recommendations,” he added. Uttar Pradesh Finance Minister Suresh Kumar Khanna said all states welcomed the Centre’s proposal, saying it is in the interest of the common man. Ultra-luxury goods, including ultra-luxury cars, and sin goods will fall in the 40 per cent tax bracket.
“Some states demand that states should be compensated for revenue loss upon implementation of the new rate structure. The revenue loss will be calculated,” Khanna said. West Bengal Finance Minister Chandrima Bhattacharya said the Centre’s proposal presented before the GoM on rate rationalisation did not include the revenue loss that is going to accrue on account of rate and slab changes and suggested that Section (1) of the GST Act be amended so that a levy can be imposed over and above the 40 per cent maximum permissible rate to ensure that the tax incidence on ultra-luxury and sin goods remains the same even after the slab changes.
Telangana Deputy Chief Minister Mallu Bhatti Vikramarka said rate rationalisation must be balanced by ensuring that the revenues of the states are protected. Otherwise, the welfare schemes meant for poor people, the middle class and infrastructure projects will suffer.
Telangana supports the proposed rate rationalisation as a part of GST reforms, but with a proper compensation mechanism, an official statement issued by the state government said. States also stressed that the GST Council should devise a mechanism to ensure that the GST cut benefits reach policyholders.
Finance Minister Nirmala Sitharaman told the GoMs that “the rate rationalisation will provide greater relief to the common man, farmers, the middle class and MSMEs, while ensuring a simplified, transparent tax regime.”
This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever
Subscribe today by clicking the link and stay updated with the latest news!" Click here!
