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Friday, October 22, 2021

No consensus in GST Council on rate for vaccines amid Centre-Oppn rift

GST Council meet: The Council, which met after October 2020, discussed the issue of compensation payments, for which states raised concerns about the 7-per cent revenue growth assumption.

Written by Aanchal Magazine | New Delhi |
Updated: May 29, 2021 8:17:51 am
GST council meet, Nirmala Sitharaman, GSt council on vaccines, Indian economy, Covid-related goods import, revenue growth, economy news, Indian express newsFinance Minister Nirmala Sitharaman during GST Council meet on Friday. (ANI)

Differences emerged between Opposition-ruled states and Centre as the discussion on granting further relief for Covid-related items, such as vaccines, medical supplies, reached an impasse in the 43rd Goods and Services Tax Council meeting on Friday. It has now been referred to a Group of Ministers, which will submit its recommendations by June 8.

The Council, which met after October 2020, discussed the issue of compensation payments, for which states raised concerns about the 7-per cent revenue growth assumption. A special session will be called soon for discussing compensation issues and the extension of guaranteed compensation period beyond June 2022. “It is one thing to rush to say — do this, it will benefit the common man. But when the technical, fitment and law committees go into the details, you realise that that could have collateral impact on many others. I am not talking about the revenue generation aspect, but how many other items will get included in it as a result of which, how you are going to implement it,” Finance Minister Nirmala Sitharaman said.

“Will these benefits eventually be passed over to the end-user — the patient, the citizen. On that there were differing views, so I suggested it should be taken to GoM and then take a view … as a Council, we are responsible to see how it reaches the common man… the GoM will come back to us and we will take a final call,” she added.

States have been demanding concessions and zero rating on Covid-related relief items. “Many states asked for zero rating, they are proposing the lowest rate of 5 per cent. They were saying that if it is zero rated, then there is no provision in the law per se and at zero tax slab, there will be no input tax credit. Many states said that it is a difficult situation of the pandemic and need not go by technicalities and if needed, then we can go for an ordinance also. Because if there is no legal provision that way, there can be an ordinance then,” Kerala’s Finance Minister KN Balagopal told The Indian Express.

The Council also discussed the set of projections made for meeting the compensation shortfall this fiscal. An estimated amount of Rs 1.58 lakh crore is likely to be borrowed through back-to-back loans to meet the promised compensation requirement for states under GST, based on the assumption that revenue growth will be 7 per cent. Sitharaman said the same formula as last year will be adopted this year too. “Rough estimate is that Centre would have to borrow Rs 1.58 lakh crore and pass it on as back-to-back loans to the states,” Sitharaman said.

Three state Finance Ministers, however, told The Indian Express that there is no unanimity on these estimates and that they will take it up in the special meeting that will be called for this purpose.

“There wasn’t unanimity on the compensation issue. There’s a difference of opinion on how they have reached the figure of Rs 1.6 lakh crore. Final decision will happen in the meeting which will be called on compensation-related issues,” Punjab’s Finance Minister Manpreet Singh Badal told The Indian Express.

“Question of consensus is not there. The 7 per cent growth estimate will not be attainable because now this month there is not much growth (in revenues), at least in time of lockdown. That’s why that expectation (of 7 per cent) is not correct,” Balagopal said.

Chhattisgarh’s Finance Minister TS Singh Deo said detailed discussion on compensation will happen later. “That was a projection, no decision has been taken. For detailed discussion on whether to extend the compensation for another five years, another special meeting will be held,” he said.

The Council also decided to exempt import of Amphotericin B, used for treating black fungus. The Council decided that import of Covid-related goods will be exempted from GST till August 31, even if they are imported on payment basis or free of cost for donating to the government or a state-approved agency.

The Council provided relief to small GST taxpayers through an amnesty scheme for late return filers. Late fee for non-furnishing of GSTR-3B for July 2017 to April 2021 has been capped at Rs 500 per return for those taxpayers who did not have any tax liability. For those with tax liability, a maximum Rs 1,000 per return late fees would be charged, provided such returns are filed by August 31. Filing of annual returns for 2020-21 for taxpayers with aggregate turnover of up to Rs 2 crore has been made optional.

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