GoM Panel likely to submit an interim report on GST rate rationalisation in next meeting

GoM Panel likely to submit an interim report on GST rate rationalisation in next meeting

The Goods and Services Tax (GST) Council is anticipated to receive an interim report from the Group of Ministers (GoM) on Rate Rationalisation, at its meeting in June.

As per reports, the interim report by the ministerial panel has recommended exemptions for business class flights from airports in the north-east, hospital rooms with rent exceeding Rs 5,000 per day, and services supplied by regulators like SEBI, RBI, and IRDA.

According to a government official, exemptions “would be offered after significant deliberation and their assessment would require meticulous consideration.”

The official went on to say that it was important to maintain exemptions for sensitive products including hearing aids, educational institutions, food, incense sticks, utensils, tractors, and agricultural gear.

Inverted duty correction is probably recommended by the study. According to the official, edible oils might not be eligible for an input tax credit return due to inverted rates.

The research will probably suggest an inverted duty correction on printing, writing, and drawing ink with a range of 12 to 18 percent. Additionally, the inverted duty structure on LED fixtures, lamps, and lights will be increased from 12 to 18 percent.

The source said there would be a 5 to 12 percent hike in the inverted duty on tailoring and other textile job works.

For solar water heaters and systems, finished and composition leather, as well as the government’s works contract, a correction of 5 to 12 percent could be suggested.

The recommendations are also anticipated to include a reassessment of hotel rates, with lower-rate hotels perhaps included in the GST’s coverage. The group may have also recommended reviewing the unbranded food items, which at the moment are exempt from GST.

The following GST Council meeting is scheduled for June 28–29 in Chandigarh. The GoM, led by Karnataka Chief Minister Basavaraj S. Bommai, came to an agreement during its meeting last week to prepare an interim report and ask for an extension of its term.

It is also rumoured that the GoM recommended raising the GST rate on electronics waste from 5% to 18% in its interim report to the GST Council, as well as raising the rate from 5% to 18% on items related to petroleum and coal bed methane exploration. As opposed to the current full exemption, it has been suggested to remove the exemption on rent for hospital rooms with rent beyond Rs 5,000.

If the GoM’s recommendation is approved by the Council, business class service from airports in the northeastern states may also be discontinued soon. This contrasts with a tax of 12% GST on air travel for business in the rest of the nation. The panel has also considered the potential of ending the exemption on services offered by the Food Safety and Standards Authority of India (FSSAI) to operators of food businesses in place of the current 18% fee on services.

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