GST Council to meet on June 22; key issues and agenda here

By: Admin
June 13, 2024
Categories: GST Recent News
4 Min Read

A day after taking charge as Union Finance Minister, Nirmala Sitharaman is all set to chair the much-awaited 53rd GST Council meeting, scheduled for June 22, in New Delhi.

Ahead of the meeting, the council-nominated Fitment Committee is likely to meet and consider several issues for detailed deliberation before sending its recommendations to the council for consideration.

What the Fitment Committee Could Consider

Sources say, “The council-nominated Fitment Committee is likely to study the proposal of the Petroleum Ministry to bring ATF under GST at 5% and natural gas either at 12% or 18%.”

Apart from this, the Fitment Committee could propose approval of “clarity on claiming ITC in several sectors where the industry has been facing issues,” sources added.

Not just this, the Fitment Committee could “lay down a proposal on tax applicability on metal and steel scrap. The industry has been waiting for this for over a year,” sources added.

The Fitment Committee could also “consider a proposal to correct the inverted duty on as many as 14 items, including textiles, leather, pharma, engineering goods, etc. This proposal has been sent by DPIIT and is awaiting deliberation,” sources added.

What the GST Council Could Deliberate Upon

Given the council is meeting after almost nine months, many pending agenda items are up for the GST Council’s consideration.

Several subcommittees of the council meet first and then streamline the agenda points for the council. These subcommittees include the Fitment Committee, which discusses rates, and the Law Committee, which deals with rules, legal interpretation, and changes. Thus, the proposals by these committees and other agendas are clubbed together for the council’s discussions.

In this 53rd meeting, the council could revise the existing Group of Ministers on Rate Rationalisation and give a new timeline for a detailed report to be submitted on rate rationalisation and correction of the inverted duty structure, sources said.

Currently, the panel is headed by UP Finance Minister Suresh Khanna, but the GoM has not met even once under his leadership. This panel was earlier under the chairmanship of Karnataka FM, B.S. Bommai, who had submitted an interim report saying that it could not achieve any consensus.

The industry is likely to push for a review of GST on online gaming, but “the council is likely to have reservations and continue with the ongoing policy of 28% GST on actionable claims,” sources added.

“This includes clarifying norms on claiming and applicability of input tax credit on telecom services and spectrum charges,” sources added.

The council will also vow to bring in further ease of doing business and better compliance, for which more measures will be proposed, sources added.

The council could bring a circular for clarity for global companies with branch offices in India and head offices abroad, sources said.

Further, clarifications are likely to be issued by the approval of the council for foreign airlines and shipping lines that have come under the DGGI scanner, sources added.

The council could consider exempting services rendered between the head offices and local branches of foreign airline operators from GST. The headquarters of airlines or shipping companies cover expenses such as maintenance, crew payments, and rental costs. Current norms say that these services provided by the headquarters abroad to the branch office in India are transactions between two different legal entities and thus, the services received in India are liable to GST.

Both foreign airlines and shipping lines have submitted detailed representations to the government, including the Ministry of Finance, MEA, etc., sensitizing them about their concerns over this matter and seeking relief from GST on such transactions.

To further plug loopholes and ensure shell companies and invalid GST IDs are weeded out from the system, the council is likely to approve a timeline for the pan-India rollout of mandatory biometric Aadhaar-based authentication of GST taxpayers, sources added.

Sources added that “the council could also come up with a roadmap for further simplification of rules and laws, and measures for enhancing compliance under GST,” as the country aims to achieve ease of living.

Industry & Experts’ Expectations

Meanwhile, listing out their expectations from the much-awaited GST Council, an expert, says, “The next GST Council meeting comes after a significant interval from the last meeting and will need to take up the keenly awaited rate rationalization discussion. In addition, a preliminary effort to include low-impact petroleum products such as natural gas within the GST ambit would be highly beneficial to business. The stability established in GST collections, together with the fact that GST changes are outside the Union Budget proposals, should provide an impetus to the GST Council in addressing various issues that need to be addressed.”

Expressing further industry demands, another expert added, “The 53rd GST Council meeting marks a significant moment, especially as it meets for the first time in nine months. With GST collections stabilizing and the flexibility to make changes outside the Union Budget, the council has an ideal opportunity to address industry concerns effectively. The expected clarifications on critical matters such as related party free-of-cost transactions and ESOP taxation are also indicative of policymakers’ efforts to engage with industry stakeholders and streamline procedures based on feedback. With the rise in disputes following the conclusion of audits for initial years, there’s hope within the industry for a review of pre-deposit percentages to align them with the erstwhile service tax regime. Additionally, there’s optimism for an amnesty scheme to resolve disputes from these initial years, helping avoid long-drawn litigation.”

Another tax expert also says, ”This meeting is expected to address a considerable number of issues. Multiple clarifications are being looked after, including the taxability for the online gaming sector before October, the taxability of ESOPs, corporate guarantee taxability, and various rate-related clarifications anticipated due to recent litigations. Another aspect most businesses are looking forward to is the new regulations on ISD and its implementation date.”

Expressing similar sentiments, another tax expert says, “The upcoming GST Council meeting, being the first of the new government, has a full plate of agenda items on its hands. There is a need to address key industry issues like the taxation of online gaming and the promised review of the valuation rules introduced in October 2023. Other items include discussion and feedback from state finance ministers on the Union Budget of 2024 and other key policy initiatives to be launched by the new government. Other agenda items could include discussion on the inverted duty structure (IDS) for various sectors, such as textiles and fertilisers, and the rationalisation of GST rates on certain items used by the popular masses in India.”

Source from: https://www.cnbctv18.com/economy/gst-council-to-meet-on-june-22-key-issues-and-agenda-here-19428001.htm