GST Council: Consensus to create tribunal, new rate cuts
26-08-2023
11:55 AM
1 min read
What’s in today’s article?
- Why in News?
- What Exactly is the Goods and Services Tax (GST)?
- What is the GST Council?
- News Summary Regarding Decisions Taken at the 49th GST Council Meeting
Why in News?
The Goods and Services Tax (GST) Council, in its 49th meeting approved the creation of a national tribunal mechanism with state benches for the redressal of disputes, cleared pending compensation dues and announced new taxation rates for some items.
What Exactly is the Goods and Services Tax (GST)?
- It is an indirect tax (not directly paid by customers to the government), that came into effect from 1 July 2017 through the implementation of the 101st Amendment to the Constitution of India by the Indian government.
- It has actually replaced various indirect taxes such as - service taxes, VAT, excise and others in the country.
- It is levied on the manufacturer or seller of goods and the providers of services.
- It is divided into five different tax slabs for collection of tax - 0%, 5%, 12%, 18% and 28%.
- Types of GST: State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST) and the Integrated Goods and Services Tax (IGST, on exports and imports).
What is the GST Council?
- Article 279A of the Indian Constitution gives power to the President of India to constitute a joint forum of the Centre and States called the GST Council, consisting of the -
- Union Finance Minister - Chairperson
- The Union Minister of State, in-charge of Revenue of finance - Member
- The Minister in-charge of finance or taxation or any other Minister nominated by each State Government - Members
- The GST Council is an apex committee to modify, reconcile or to make recommendations to the Union and the States on GST, like the goods and services that may be subjected or exempted from GST, model GST laws, etc.
- Decisions in the GST Council are taken by a majority of not less than three-fourth of weighted votes cast.
- Centre has one-third weightage of the total votes cast and all the states taken together have two-third of weightage of the total votes cast.
- All decisions taken by the GST Council have been arrived at through consensus.
News Summary Regarding Decisions Taken at the 49th GST Council Meeting
Image Caption: GST Compensation Dues
- Constitution of the GST Appellate Tribunal with state benches:
- In a significant respite for taxpayers, the Tribunal will resolve the rising number of disputes under the GST regime that are now clogging High Courts and other judicial fora.
- This year’s Finance Bill can incorporate the enabling legislative provisions for the Tribunal.
- Releasing GST compensation (amounting to ₹33,506 cr) dues to States:
- The entire pending balance of ₹16,982 crore for June 2022 [the last month of the five-year period since GST’s launch for which such recompense was payable to States] will be cleared.
- Six States and UTs are also being paid ₹16,524 cr as additional compensation based on certificates from their respective Accountant Generals.
- This money will come from the exchequer’s own coffers as the GST Compensation Cess Fund does not have an adequate balance, and will be recouped from future cess collections.
- Approved lower penal charges:
- For delayed filing of annual returns by businesses with a turnover of up to ₹20 crore a year.
- An amnesty scheme for taxpayers unable to file three statutory returns, that entails conditional waivers or reductions in late fees for such filings.
- Rate changes:
- The GST rate on Raab, a kind of liquid jaggery typical to sugarcane-growing States like UP, will be reduced from 18% to nil, if it is sold loose, and 5%, if it is pre-packaged and labelled.
- On pencil sharpeners, it is being reduced from 18% to 12%. Tag-tracking devices or data loggers already affixed on containers will no longer attract a separate GST levy of 18%.
- The Council also decided to extend the GST exemption to educational institutions and central and state educational boards from conducting entrance examinations through any authority, including National Testing Agency.
- Plugging tax evasion:
- The Council has decided to switch the compensation cess levied on pan masala and gutkha commodities from an ad valorem basis to a specific tax-based levy.
- This will boost the first stage collection of the revenue and mandated that exports only be allowed against letters of undertaking assuring of GST compliance.
Q1) How is the GST Council constituted?
Article 279A of the Indian Constitution gives power to the President of India to constitute a joint forum of the Centre and States called the GST Council, consisting of the Union Finance Minister – Chairperson; The Union Minister of State, in-charge of Revenue of finance – Member; etc.
Q2) How a final decision is arrived at in a GST Council meeting?
Decisions in the GST Council are taken by a majority of not less than three-fourth of weighted votes cast. Centre has one-third weightage of the total votes cast and all the states taken together have two-third of weightage of the total votes cast. All decisions taken by the GST Council have been arrived at through consensus.
Source: GST Council reaches consensus to create tribunal, new rate cuts | TH