New Delhi: The 31st Goods and Services Tax (GST) Council meeting began in the Capital on Saturday. The GST Council is expected to discuss reducing tax rates on a host of products, amid an intense political debate between Prime Minister Narendra Modi-led NDA government and the Opposition Congress on the implementation of GST.
The Council is set to discuss reducing tax rates on items in the highest slab of 28% such as cement, cameras and dish washers, as well as on products that are of local interest to individual states.
However, there is unlikely to be any discussion on the proposal for a disaster cess to raise resources for rebuilding states that face natural disasters. A panel of state ministers is still examining the issue.
Prime Minister Narendra Modi on Tuesday said he had given suggestions to the Council and the effort was to make sure 99% of items attract 18% or lower GST, leaving only sin or luxury items in the highest tax bracket of 28%.
Modi’s comments were followed by some sharp reaction from political leaders such as Congress’ P Chidambaram and Trinamool Congress’ Amit Mitra, also a member of the Council. Mitra said Prime Minister Narendra Modi’s statement undermined the constitutional authority of the Council as it pre-empted the decision making authority of the Council, The Indian Express reported.
Leaving only 1% of items in the 28% slab as promised by Modi would require cutting tax rates on about 25 categories in the highest slab.
Keeping 18% as the standard rate, which covered most of the goods, was a demand that Congress had made when the NDA government was about to implement the tax reform. But at that time, the consensus between union and state governments was to follow the principle of tax neutrality during the transition. However, the Council subsequently reduced the tax rate on a large number of items, which eventually led to the reduction of tax rate on a number of items in the highest tax slab. That included rate cuts on washing machines, small televisions and air conditioners from 28% to 18% in July.
In a Twitter post on Thursday, finance minister Arun Jaitley said the Congress party-led United Progressive Alliance (UPA) had left behind a legacy of 31% indirect tax on most items. “Wasn’t the 31% Tax an oppressive idea - a stupid one at that," Jaitley said.
Chidambaram alleged that discussing simplification of filing returns at this juncture was an admission that filing returns had not been easy in the last 18 months. “The truth is filing GST returns has been a nightmare," he said in a twitter post on Thursday.