Bommai panel seeks to fix GST anomalies
NEW DELHI: A panel on goods and services tax (GST) rate rationalization on Friday recommended in an interim report that the federal tax body, the GST Council, fix the tax anomalies leading to avoidable litigation and refund claims, a person familiar with the discussions in the committee said.
The committee, led by Karnataka chief minister Basavaraj Bommai, however, decided to defer discussions on GST rate rationalization meant to boost revenue collection, as inflation is currently high and beyond the central bank’s comfort zone.
This issue will be considered again after the GST Council
meeting later this month, said the person who asked not to be named as the discussions are not public.
The person added that inflation was cited as a key concern by the panel members on rate
rationalization.
The GST Council will consider the Bommai committee’s interim report as well as the report of another panel led by Meghalaya chief minister Conrad Sangma on the taxation of casinos, race courses and online gaming at its two-day meeting in Srinagar starting on 28 June.
The Sangma panel has recommended specifying a 28% tax rate on casinos, race courses and online gaming.
Currently, these companies are paying 18% GST, backed by court orders due to ambiguity on the subject.
The Bommai panel’s report will recommend ways of fixing the inverted duty structure—the anomaly of tax outgo on raw materials exceeding that on finished products.
It would mean reworking the tax rates on some items.
It will also suggest cases where tax exemptions could be withdrawn. But resolving the inverted duty structure in the textile industry will not be part of the interim report, the person cited above said.
The GST Council had in December put on hold a decision to raise the tax rate on several items in the textile and apparel industry meant to resolve the tax anomaly amid pressure from businesses.
The plan was to raise the tax rate from 5% to 12% on several items, including woven cotton fabric, silk and wool, coir mats, matting and floor covering.
MS Mani, a partner at Deloitte India, said since the GST Council meeting is being held after a long interval, a twoday meeting would give members sufficient time to discuss key issues as the indirect tax regime completes five years.