The GST Council in its two-day meeting starting Tuesday is slated to discuss an array of issues, including a mechanism for compensating States for revenue loss, tax rate tweaks in some items and relaxed registration norms for small online suppliers.
Further, the Council, chaired by the Union Finance Minister and comprising State counterparts, will also clear levying the highest tax of 28% on online games, casinos and horse racing, besides, discussing a report by a group of Ministers (GoM) on high-risk taxpayers under GST to curb evasion.
The GST Council will also consider a report of the panel of State ministers on making the e-way bill mandatory for intra-State movement of gold/ precious stones worth ₹2 lakh and above and e-invoicing mandatory for all taxpayers supplying gold/precious stones and having annual aggregate turnover above ₹20 crore.
Besides, an interim report of a group of Ministers on rate rationalisation, which is likely to recommend correcting the inverted duty structure and removing some items from the exempted list, would also be taken up for consideration.
Separately, the report of the committee of State and central officers, commonly referred to as the Fitment Committee, which suggested tweaking rates in a handful of items and issuing clarification in case of a majority of items, would also be deliberated upon at the meeting to be held in Chandigarh on June 28 and 29.
The officers’ committee has also suggested deferring a decision on taxability of cryptocurrency and other virtual digital assets, pending a law on regulation of cryptocurrency and classification as to whether it should be under goods or services.
The Council may see a stormy discussion around compensation payout to States with opposition-ruled States aggressively pushing for its continuation beyond the five-year period which ends in June.
The Centre, last week, notified extension of the compensation cess, levied on luxury and demerit goods, till March 2026 to repay borrowing that was done in 2020-21 and 2021-22 to compensate States for GST revenue loss.
GST was introduced from July 1, 2017, and Sates were assured of compensation for the revenue loss, till June 2022, arising on account of the GST roll-out.
Though states’ protected revenue has been growing at 14% compounded growth, the cess collection had not increased in the same proportion; COVID-19 further increased the gap between projected revenue and the actual revenue receipt including reduction in cess collection.
In order to meet the resource gap of the States due to short release of compensation, the Centre borrowed and released ₹1.1 lakh crore in 2020-21 and ₹1.59 lakh crore in 2021-22 as back-to-back loans to meet a part of the shortfall in cess collection.
The Council is also likely to relax compulsory registration norms for small businesses with annual turnover of up to ₹40 lakh and ₹20 lakh for goods and services respectively, using e-commerce platforms to sell products.
Currently, vendors supplying through e-commerce channels are required to take compulsory Goods and Services Tax (GST) registration.
Also, businesses with a turnover of up to ₹1.5 crore and making e-commerce supplies would be allowed to opt for the composition scheme, which offers a lower rate of tax and simpler compliance norms.
Currently, businesses supplying through e-commerce channels cannot avail of the composition scheme.
The changes would bring in parity between entities that are doing businesses through either the online or the offline mode under GST.
The report of a panel of State Finance Ministers has suggested verification after registration for high-risk taxpayers under GST, besides using verification of electricity bill details and bank accounts for identifying such taxpapyers.
