36th GST Council Meet Date Announced, to be Held on 25 July 2019

The GST Council will convene a meeting via video conferencing on coming Thursday, 25 July 2019. The meeting will be chaired by FM Nirmala Sitharaman primarily to discuss and find closure on the long-pending proposals of GST rate cuts.

The first one on the agenda is electric vehicles. The GST rate on supply of the electric vehicles (EV) is more likely to be reduced from the existing 12% to 5%. Further, the rate of GST charged for the hiring of electric vehicles can be brought down from 18% to 5%.

The matter had been referred to the Fitment Committee in the last 35th GST Council meeting held a month back. The Fitment Committee will place its report on the feasibility study before the GST Council on Thursday. 

The rate cut will give a significant boost to the manufacturing and demand for electric vehicles if the rate reduction decision is passed. There are limited EV players in the Indian market with a majority share taken away by petrol or diesel vehicles due to the high price and limited availability of EV.

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Also, the direct tax incentives available to consumers for purchasing electric vehicles will aid the growing sector. The EV sector is in its nascent stage in India. Hence, the EV market will take another three to four years before becoming prominent in metro and tier 2 cities.

The next item on the list to be addressed to is whether or not to continue with differential tax treatment for lotteries. The last couple of meetings had raised the proposal of removing the dual tax treatment of lotteries within a State/Union Territory.

However, no conclusion could be achieved due to the lack of time and after giving due regard to the importance that the matter holds. It is speculated that this meeting will find a resolution for the taxation of lotteries. The last meeting had decided to refer the case before a learned counsel such as an Attorney General.

The regularity currently imposed on the lottery is contradicting the Article 304 of Indian Constitution, that discourages dual taxation of the same or similar item within the State in which it is traded.

Apart from the above proposals, it has been contemplated that tax treatment on solar power projects will be made clear.

The previous GST Council meeting held on 21 June 2019 had many prominent decisions being taken such as the due date extension of GSTR-9 annual returns, e-invoicing for business-to-business (B2B) supplies from January 2020, and Aadhaar-linked GST registration to mention a few.