GST Council meeting to review cess hike on large cars, tax on farm output
New Delhi: The goods and services tax (GST) Council, the federal indirect tax body chaired by finance minister Arun Jaitley, will meet in Hyderabad on Saturday to consider the nitty-gritty of the cess on large cars and examine demands for relief on branded agricultural produce and a few other items of mass consumption.
The council, which has ministers from states and Union territories with legislatures as members, will also review the functioning of the IT systems of the Goods and Services Tax Network (GSTN), the company that processes tax returns, in view of the difficulties reported by businesses in filing returns.
While the Union government promulgated an ordinance on 3 September, raising the maximum cess that may be levied on medium-sized to large cars and sports utility vehicles (SUVs) from 15% to 25%, the council has to decide the quantum of increase to be enforced in view of revenue requirements. The cess goes to a fund meant to compensate states for revenue losses in the first five years of the GST regime.
According to an official who spoke on condition of anonymity, 10% is the maximum increase allowed under the ordinance. The official said many in the council may not find a 10% increase in cess on all cars desirable in view of the decline in the economic growth rate to 5.7% in the June quarter of 2017-18 and ahead of the festive season.
Another person informed about the discussions, also speaking on condition of anonymity, said only cars and SUVs priced above Rs20 lakh may see an increase of 10% in cess.
Car makers have made representations to the council to refrain from raising the cess at present, said an industry representative, who also spoke on condition of anonymity. The final decision is also likely to be influenced by state representatives who tend to support revenue-raising measures.
The council will also discuss demands for giving relief to branded agriculture produce from the 5% tax. Unbranded agriculture produce is not taxed.
The council will deliberate on the performance of the IT infrastructure supporting GST. In view of the difficulties faced by businesses in filing returns, the deadline for filing detailed returns for the month of July and August were extended. The last date for filing returns on supplies made by companies is 10 September as per the revised schedule. GSTN on Saturday urged businesses to file returns by the deadline and avoid the hassles of late filing, apart from a late fee.
“Companies are still facing difficulties in filing GST return 1 (dealing with supplies). Industry is hoping the due date will be further extended,” said Pratik Jain, partner and leader of indirect tax practice at PwC India.
The government on Friday gave additional charge of GSTN chairmanship to A.B. Pandey, chief executive of Unique Identification Authority of India, (UIDAI), an official statement said.
On Friday, the Congress party fielded Punjab finance minister Manpreet Singh Badal and Karnataka agriculture minister Krishna Byre Gowda in a joint press conference along with chief spokesperson Randeep Singh Surjewala. The key issues the party leaders will flag in Saturday’s council meeting include revenue shortfall of states and concerns of the textile sector.
While Badal said there was a lot of “pressure on the states and chaos” in manufacturing sectors such as textiles, Gowda said Karnataka had fallen short of revenues to the tune of Rs600 crore in July, the first month of GST implementation “Congress party stands committed to taking up these issues in the GST council through the finance ministers of Congress-ruled states,” a joint statement said.
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