Governance Polity

GST Council Decisions

  • On July 11, the Goods and Services Tax (GST) Council held its 50th meeting, announcing important modifications and clarifications to tax rates.
  • The council also addressed the formation of GST Appellate Tribunals.
  • It attempted to resolve concerns about the GST Network’s inclusion under the Prevention of Money Laundering Act (PMLA).
  • The Goods and Services Tax (GST) Council is an important organisation established under the 101st Constitutional Amendment in 2016 to monitor the GST regime’s implementation in India.
  • The Council, which is made up of representatives from the central government and the states, is crucial in making GST recommendations and decisions.

Composition of the GST Council

  • The GST Council is a combined forum comprised of members from the Centre (the Union Finance Minister and the Union Minister of State for Finance) and representatives from the states.
  • State representation: Each state appoints to the Council a minister in charge of finance, taxation, or any other relevant minister.

Recommendation authority:

  • The GST Council is responsible for making recommendations to the Union and the states on critical GST-related matters. This includes recommendations on whether commodities and services should be subject to or excluded from GST, as well as the development of model GST statutes.
  • Tax rate decision-making: The GST regime’s multiple rate slabs are determined by the Council. It has the authority to set the tax rates for various commodities and services.

Proposals for Recent Tax Rate Changes

  • Uncooked and unfried snack pellets, as well as fish soluble paste, have had their tax rate cut from 18% to 5%.
  • The GST rate for imitation zari threads or yarn has been decreased from 12% to 5%.
  • Food and beverages consumed in movie theatres: The GST rate for these items was cut to 5%, with no input tax credits, from the former 18% levied on cinema services.
  • SUVs: The tax treatment of SUVs has been clarified, ensuring that the higher GST compensation cess does not harm sedans. The requirements for designating a vehicle as an SUV were amended to remove the criterion of being commonly perceived as an SUV. The 170 mm ground clearance should now be for an unladen vehicle.
  • Exemption for satellite launch services: The Council provided a GST exemption for commercial organisations that provide satellite launch services.

Other suggestions: Appellate Tribunals for GST

  • Proposal for establishing GST Appellate Tribunals: The requests of states to establish 50 GST Appellate Tribunal benches were reviewed. These tribunals would be critical in settling GST disputes.
  • Timeline for operation: The government expects the tribunals to be operational within four to six months, beginning with the construction of Benches in state capitals and locations where High Courts have Benches.
  • Conditions of appointment and service: The Council approved the terms of appointment and service for tribunal members and the president, which will take effect on August 1.

GST Network inclusion under PMLA

  • Concerns expressed by states not ruled by the BJP: Representatives from states not governed by the BJP slammed the move to subject the GST Network to the Prevention of Money Laundering Act (PMLA), which is enforced by the Enforcement Directorate (ED).
  • Tamil Nadu has stated its resistance to the proposal, claiming that it is detrimental to taxpayers and contradicts the GST law’s goal of decriminalising offences.
  • Explanation and clarification: The Revenue Secretary explained the provision, claiming that it is a requirement of the Financial Action Task Force (FATF) and has nothing to do with the GST law.
  • Information sharing: The GSTN will not share private business information with other law enforcement agencies. Although the ED will not receive or provide information, the director of the Financial Intelligence Unit may provide information to the GSTN in order to assist tax authorities in combatting tax evasion and money laundering.
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