GST Council meeting: State FMs connect via video link, Centre defers meet last minute

Officials said Sitharaman was required to be present in Parliament as Rajya Sabha was scheduled to take up discussion for amendments to the Insolvency and Bankruptcy Code along with the introduction of The Companies (Amendment) Bill, 2019 in Lok Sabha.

On the concerns for reduction in GST rate for electric vehicles, the state Finance Minister said states such as Kerala, West Bengal spoke against the reduction in tax rate on electric vehicles, while others were of the view that the GST rate cut for electric vehicles would be in line with the Budget announcements that have already been made to incentivise the usage of electric vehicles. Also, the revenue loss on account of the GST rate cut for electric vehicles is not expected to be huge, with official estimates pegging the annual revenue loss at around Rs 70-80 crore if the GST rate is reduced from 12 per cent to 5 per cent, the minister added.

On Tuesday, West Bengal Finance Minister Amit Mitra had written to Sitharaman objecting to a hurriedly called ‘single agenda meeting’ and said other important issues flagged by the states should be included in the agenda. Mitra said that the Centre was taking a “myopic view” of the automobile industry by proposing a sharp cut in GST rate on e-vehicles, and completely ignoring the “disastrous impact” of such a move on the existing automobile units and entire auto service sector. Mitra in his letter had said that GST rate reduction should be instead considered for BS VI compliant vehicles and hybrid vehicles. “I would like to point out that a large number of tax related issues are pending with Fitment Committee much before the matter of reduction of tax on EVs was brought to the GST Council. Is it not desirable that all these pending issues should get similar importance? For instance, I have been requesting the Council to consider the demand of the wagon industry in allowing refund due to inverted duty structure. Our failure to address this issue is affecting the livelihood of more than 2 lakh workers i.e. more than 10 lakh family members,” Mitra had said in his letter.

In its previous meeting held last month, the Council had referred the issue relating to GST rate cut on EVs, chargers and hiring of EVs to the rate fitment committee, which is an officers level committee. The recommendations of the officers committee were to be placed before the Council on Thursday. The Central government has set a target of 30 per cent vehicles becoming EV by 2030. In the Budget, the Centre announced an income tax deduction of Rs 1.5 lakh on interest paid on loans taken to purchase EVs, and Customs duty exemptions on imports of specific components.

A physical GST Council meeting is likely to be considered after Parliament session. Other pending GST rate change related issues, as stated after the previous Council meeting, include tax structure for solar power projects and taxation of lotteries. In the previous meeting, the Council had decided to seek legal opinion of the Attorney General for levying GST on lottery.