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Regular-article-logo Saturday, 13 July 2024

GST meet braces for tussle on tax cut

Council meeting to bring down tax from 28% tax bracket to 18%

Our Special Correspondent New Delhi Published 21.12.18, 07:47 PM
States say the promise of high GST tax collections has not been fulfilled and the government compensation for lost taxes has often been delayed.

States say the promise of high GST tax collections has not been fulfilled and the government compensation for lost taxes has often been delayed. Shutterstock

The GST Council, which is meeting here on Saturday, is being prodded to slash duties on about a dozen to 14 products, including air conditioners, refrigeration equipment, cameras, cement and tyres.

However, a fightback by state governments, who have resented an advance hint by the Centre of a possible duty cut, might see some of the items being struck off the list on the back of arguments by the states that the items are a luxury for many people.

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Most of the items to be taken up at the council meeting are in the top bracket of 28 per cent and will be brought down to the 18 per cent slab, though the rates on some could be lowered further.

At present, the GST has four tax slabs of 8, 12, 18 and 28 per cent and a zero-rated slab for essential goods.

Earlier this week, Prime Minister Narendra Modi had said 99 per cent of goods and services will be brought in the 18-per-cent or less GST slabs and the highest slab restricted to just a few select luxury and sin goods.

Bengal finance minister Amit Mitra on Thursday protested the Prime Minister’s announcement pointing out it was the “GST Council alone which has the constitutional” power to decide on GST rates.

The council consists of both central and state finance ministers. However, in the past the central government had often taken the credit for most of the duty cuts.

States have also pointed out that the promise of high GST tax collections has not been fulfilled and the government compensation for lost taxes has often been delayed. Their contention is that more tax cuts without the framework stabilising could cause more damage to the GST architecture.

Analysts said with a general election expected to be held in April-May next year, the tax cuts are being hurried to please voters. However, many of the cuts are also the result of anomalies pointed out by the industry chambers as well as consumer bodies.

Officials argue if the Opposition states were to stop the rate cuts, it might backfire as middle class voters make up a large section of their base. They said the GST Council may also be asked to consider reducing the tax on electric vehicles and hybrid cars.

Finance officials of various states who met here on Friday also reviewed the GST returns system and pointed out the problems with them as well as with the refunds process.

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