GST Council meet: State compensation, tax tweaks on cards

The GST Council in its two-day meeting starting Tuesday is slated to discuss an array of issues, including a mechanism for compensating states for revenue loss, tax rate tweaks in some items and relaxed registration norms for small online suppliers.

Further, the Council, chaired by the Union Finance Minister and comprising state counterparts, will also clear levying the highest tax of 28 per cent on online games, casinos and horse racing, besides, discussing a report of a GoM on high-risk taxpayers under GST to curb evasion.

The GST Council would also consider a report of the panel of state ministers on making e-way bill mandatory for intra-state movement of gold/ precious stones worth Rs 2 lakh and above and e-invoicing mandatory for all taxpayers supplying gold/precious stones with annual aggregate turnover above Rs 20 cr.

Besides, an interim report of a group of ministers on rate rationalisation, which is likely to suggest correcting the inverted duty structure and removing some items from exempted list, would also be taken up for consideration. Separately, the report of the committee of state and central officers, commonly referred to as the Fitment Committee which suggested tweaking rates in a handful of items and issuing clarification in case of majority of items would also be deliberated at the meeting to be held at Chandigarh June 28-29.

The officers’ committee has also suggested defering a decision on taxability of cryptocurrency and other virtual digital assets, pending a law on regulation of cryptocurrency and classification on whether it is goods or services.

The Council may see a stormy discussion around compensation payout to states with opposition-ruled states aggressively pushing for its continuation beyond the five-year period which ends in June. The Centre, last week, notified extension of the compensation cess, levied on luxury and demerit goods, till March 2026 to repay borrowing that were done in 2020-21 and 2021-22 to compensate states for GST revenue loss.

GST was introduced from July 1, 2017, and states were assured of compensation for the revenue loss, till June 2022, arising on account of GST roll out.

The Centre, last week, notified extension of the compensation cess, levied on luxury and demerit goods, till March 2026 to repay borrowing that were done in 2020-21