met in person after about eight months, Goods and Services Tax (GST) Council on Saturday widely agreed upon GST Appellate Tribunal set up to resolve disputes Under the tax regime introduced in July 2017. After some fine-tuning in consultation with states, the finance ministry is expected to incorporate legislative backing for the tribunals in the Finance Bill to be passed next month. This raises hopes of speedy settlement of GST disagreements that are piling up the case load of courts, but the reason for the delay in this vital cog in the promise of ‘One Nation, One Tax’ is hard to fathom. Some rate changes, which could make pencil sharpeners slightly cheaper, among other things, and lower penalty charges for late filing by small taxpayers have also got the council’s nod. The implications of some other moves like a new system for evasion-prone sectors like gutkha will depend on the specifics of their notifications. The much-awaited GST review on online gaming and casinos is stuck. The alleged reason for not taking it up this time was that the head of the ministerial group assigned to the issue had the work of assembly elections. With nine assembly elections due this year, it does not bode well for the council’s ability to swiftly resolve complex issues this year.
What is more worrying is that the rationalization of the complex GST rate structure with multiple slabs has been stalled, and important inputs have been left out. A Group of Ministers (GoM) was tasked with proposing a fix for anomalies in the GST levy such as inverted duty structure and revised rates with lower slabs, by the end of 2021. The council was informed that the GST is still not delivering enough revenue – rate cuts on some items between 2017 and 2021, with a total tax rate closer to 12% instead of the 15.5% revenue-neutral rate originally envisaged While some of the anomalies pointed out by the GoM were fixed last June, the Center indicated that a change in rates would be deferred as inflation had risen and any revision would mean little. There will be higher taxes for goods. The report on rate reforms is still awaited, inflation remains a headache and the onset of the election season that ends with the Lok Sabha elections in 2024 means that the same conundrum holds true. Stricter compliance and higher prices have also pushed up average GST revenue, perhaps reducing the urgency to fix the cumbersome tax tangle. But for taxpayers, who continue to pay 28% GST on an essential commodity like cement – whether it is used to make a roof over one’s head or to build an expressway – a really nice and simple tax system Will have to wait till at least 2025.
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