Rate changes likely in GST Council meet
BENGALURU/NEW DELHI: The GST Council is set to give extra time for officials to demand tax dues and for businesses to seek refund for past years in view of the disruption caused by the pandemic. The Council may also revise tax rates on certain items such as accessories used by cancer patients, imported defence items and tetra packs.
The Council is also likely to clarify on taxability of several service sectors such as ice-cream parlours, ropeway travel and rental of transport vehicles, as per the agenda for the Council meeting, reviewed by Mint.
The Centre and states will also consider several rule changes meant to improve tax compliance at the two-day meeting of the Council starting on June 28.
Extra time for demanding tax dues and refunds is being proposed in view of the Covid-related disruption. The law currently allows a tax official to demand any tax that has not been paid or wrongly refunded within three years from the annual return filing due date.
The plan is to give time till the end of September 2023 for raising tax demands for FY18. Without this change, officials would have had time only till early February 2023 for issuing demands for FY18, given that the extended due date for annual return filing was in February 2020. Besides, the period between March 1, 2020, and February 28, 2022, will be excluded from the calculation of the limitation period for businesses to seek tax refunds, as well as for tax inspectors to issue demand in the case of erroneous refunds.
With a planned major revamp of tax rates and slabs deferred due to a surge in inflation, the fiscal woes of state governments and steps to boost GST system’s efficiency are set to be in focus at the GST Council meeting. It is expected to take up proposals to remove tax exemptions and correct the inverted duty structure, in addition to examining proposals by a ministerial group that recommended tighter enforcement and GST registration process led by data analytics.
The Council is likely to take up changes in GST rates on items where a so-called fitment panel has recommended revisions. It suggested that a group of ministers on rate rationalization should examine GST rate increase on cut and polished diamonds to 1.5% from 0.25%.
The panel has proposed lowering GST rates to 5% from the current 12% on ostomy appliances including the pouch for collecting waste from the body, which is used by cancer patients. It has also recommended a uniform rate of 5% for orthopaedic implants, braces, and artificial limbs. Emails sent to the finance ministry and to the GST Council secretariat on Wednesday remained unanswered.