The GST Council was initially supposed to meet in the mid of September 2022. However, the 48th GST Council meeting is unlikely to happen in September 2022 as one of two Group of Ministers (GoM) may be unable to submit its report. The meeting was to happen in Madurai, Tamil Nadu.
One of the GoMs was formed to discuss the Goods and Service Tax Appellate Tribunal. The other was formed for GST on online gaming, casinos, and horse racing. Both are yet to submit the final report. Conrad Sangma and Mauvin Godinho, member of the GST Council in the GoM, says that the legal opinion was pending on rate and valuation. Hence, the report may be submitted in a week or two. The main contention of the members is that online games of skill must be treated differently compared to games of chance.
A few significant Goods and Services Tax reforms will mostly be delayed because of persisting inflation concerns. A GoM for GST rate rationalisation also had to submit its report. The committee on rate rationalisation may seek an extension to submit their final report due to delays caused by inflation concerns.
The GoM, whose tenure was extended for the third time, was expected to submit a report by end-September 2022 but has not met since the end of June 2022. Nevertheless, the GoM may schedule the meeting in mid of October 2022 if inflation moderates.
The GoM on rate rationalisation comprises seven members and is headed by Karnataka CM Basavaraja Bommai. These members hold portfolios in Bihar, Uttar Pradesh, West Bengal, Kerala, Rajasthan, and Goa.
In its previous meeting on 29th June 2022, the GST Council gave three months to the GoM to submit the final report. The Consumer Price Index, or retail inflation, in August 2022 spiked to 7% for higher food prices. Inflation rose further from 6.71% in July 2022. Retail inflation has persistently stayed over a targeted 4% (+-2%) band straight for the eighth month.
The GoM is considering quashing the 12% GST slab. It may suggest items under the 12% GST slab be accommodated under the 5% and 18% GST rate slabs. Further, the GoM could discuss increasing the 5% GST slab to 6% or 7% to reach the revenue-neutral rate.
Moreover, the Finance Ministry is also working on a comprehensive indirect tax scheme to levy taxes on cryptocurrency transactions. Its legal nature is being discussed, after which the rates will be fixed, which may be between 18% and 28%.
The Revenue Neutral Rate (RNR) happens to be 15.5%, and the present slabs remain much below this rate. A maximum portion of revenue is garnered from the 18% slab rate. The interim report by the GoM on rate rationalisation suggested correcting the inverted tax structure and removing certain exemptions earlier passed by the GST Council. Accordingly, the GoM’s final report will have more such items to be discussed by the GST Council in its next meeting.
There are speculations that the GST Council may not go for GST rate rejig during the current fiscal year, according to an official media source. The presence of high inflation has lowered the demand for it since the goal of reaching the RNR in GST ultimately results in higher rates for more items and increases the prices.
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Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.