Sectoral Reforms and Challenges Discussed at GST Council Meeting

Sectoral Reforms and Challenges Discussed at GST Council Meeting

New Delhi - The GST Council meeting convened today is poised to address a spectrum of reforms and policy adjustments, with significant implications across various sectors.

Key deliberations include potential delays in bringing petroleum products under the GST ambit and long-awaited rate rationalization. Discussions are also expected on reducing GST rates for insurance products. Additionally, the council may consider conditional waivers for interest or penalties on tax notices issued between 2017 and 2020, empowering both central and state authorities to quash such notices related to industry-specific trade practices. Another proposal on the table is reducing the pre-deposit amount for filing appeals, potentially lowering it from 10% to 7%.

These deliberations are anticipated to pave the way for broader reforms in the GST regime, which will mark its seventh year in July. They may also provide relief to sectors facing tax demands and penalties, such as insurance, non-banking financial services, banks, airlines, and shipping companies. Furthermore, the council is likely to reconstitute the group of ministers tasked with rate rationalization, potentially setting new deadlines and mandates. There is also a focus on revisiting GST rates for fertilizers, currently set at 5%, along with higher rates for raw materials like Sulphuric Acid and Ammonia at 18%.

Other agenda items include reviewing the 28% GST on online gaming companies and clarifying recent decisions such as exempting extra neutral alcohol from GST. The council is expected to address issues related to GST on corporate guarantees, compliance improvements through biometric-based Aadhaar authentication for risky taxpayers, and unique identifiers for unregistered individuals generating e-way bills. Clarifications on taxability of inter-company loans, determination of place of supply for custodial services by banks to foreign portfolio investors, and provisions for tax collected at source on e-commerce services are also on the agenda.

Earlier, Finance Minister Nirmala Sitharaman chaired a pre-budget meeting with state and union territories' finance ministers, seeking inputs for the upcoming Union Budget. This follows consultations with economists, finance experts, industry bodies, and stakeholders, reflecting the government's efforts to shape comprehensive economic policies. Today's GST Council meeting marks the first since the new government's formation, a bold statement of its importance in shaping India's fiscal landscape.

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