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Friday, October 22, 2021

Lined up for GST Council meet: Rate review of 50 items

States are guaranteed compensation under GST for the revenue gap between actual collections and the protected amount based on 14 per cent compounded rate from base year 2015-16 for five years of GST rollout till June 2022.

By: ENS Economic Bureau | New Delhi |
Updated: September 17, 2021 11:02:12 am
Last year, the government had decided to borrow to meet compensation cess deficit through back-to-back loans to states.

A review of over 50 items in the form of rate changes and clarifications along with discussions to extend the compensation mechanism for states beyond the existing legal mandate till June 2022 are some of the key issues on the agenda of the Goods and Services Tax (GST) Council in its 45th meeting to be held in Lucknow on Friday.

States are guaranteed compensation under GST for the revenue gap between actual collections and the protected amount based on 14 per cent compounded rate from base year 2015-16 for five years of GST rollout till June 2022. Last year, the government had decided to borrow to meet compensation cess deficit through back-to-back loans to states.

The first batch of Rs 75,000 crore to meet the compensation shortfall for states was released in July. To pay back these borrowed amounts through back-to-back loans and pending compensation payment through cess collections, the compensation arrangement is estimated to stretch for 2.5-3 years beyond June 2022.

The Council is also going to take up review of rates for 32 goods and 29 services. The fitment panel under the Council has recommended changes for items such as including solar PV projects, fresh fruits and nuts, coconut oil, carbonated beverages, fortified rice kernel, indoor amusement parks. The fitment panel has also recommended no rate changes for ceiling fan, air cooler, rubber, cotton, metal scrap, lithium ion battery and no input tax credit for sanitary napkins.

The Council is expected to extend tax concessions to 11 drugs used in Covid treatment. Also, discussion to tax petrol and diesel under GST will be initiated along with a proposal to treat food delivery apps such as Zomato and Swiggy as restaurants would be taken up by the Council.

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