Newz Desk, Durgapur: The Centre is set for a major GST overhaul, moving to just two slabs of 5% and 18%. This is likely to be introduced in the 56th Goods and Services Tax (GST) Council meeting in New Delhi, scheduled on September 3-4.
The meeting, to be chaired by Union Finance Minister Nirmala Sitharaman, is expected to take up issues related to rate rationalisation, compensation cess, and measures to improve compliance. An officers’ meeting has also been scheduled for September 2 to prepare the groundwork for the Council’s discussions.The Centre has proposed shifting to a simpler two-rate structure of 5% and 18% while scrapping the current 12% and 28% along with a peak levy of 40% high-end luxury and sin goods.
Prime Minister Narendra Modi described the move as a “next-generation reform” aimed at easing compliance and lowering disputes in his Independence Day address. The Council will also likely discuss introducing an additional duty of over 40% on select items to make up for states’ revenue needs after the withdrawal of the compensation cess.
The Group of Ministers (GoM) of state finance ministers on Rate Rationalisation backed the Centre’s proposal for the two-tier GST structure on August 21 and decided to recommend it to the GST Council, the GoM convener and Bihar Deputy Chief Minister Samrat Choudhary said. However, in the August 21 meeting, several states raised concerns over potential revenue loss and stressed the need for continued compensation, as per West Bengal Finance Minister Chandrima Bhattacharya.
However, during the August 21 meeting, several states flagged the possible revenue loss and urged the need for continued compensation, said West Bengal Finance Minister Chandrima Bhattacharya.
Bhattacharya said West Bengal has proposed additional levy over and above 40 per cent on certain goods. “Items on which compensation cess is levied, on these additional items an extra levy should be imposed to compensate for the losses incurred by states,” Bhattacharya said, speaking to the media. She said the Centre had not yet quantified the revenue loss, and mentioned that while all states support pro-people decisions, the impact of revenue loss on states also needed attention.
