Finance Minister Nirmala Sitharaman will preside over the 43rd GST Council meeting via video conferencing at 11 am on Friday.
The council is going to meet for the first time in around eight months, the last meeting was held in October last year. The meeting will be attended by the Minister of State for Finance, Anurag Thakur, Finance Ministers of States & Union Territories and senior officials from the Centre and states.
The GST Council is expected to discuss several key issues comprising tax waivers on COVID-19 medicines, medical equipment and vaccines as well as compensation to states.
Slashing GST rates for two-wheelers and bringing natural gas into the ambit of indirect tax is also reportedly on the agenda.
GST Council meet: Expectations
GST compensation to states
The GST Council is likely to decide on doling out a greater compensation for states given the deficit in their revenue incomes. States want the Centre to extend GST compensation beyond July 2022 as economic uncertainty continues in view of the COVID-19 pandemic.
The council may also deliberate on the estimated Rs 2.69 lakh crore that states need to be provided as per the promise in 2017 to make good any loss in revenue they suffer from giving up their right to levy VAT and other taxes.
Multiple GST rate-slabs
The industry has for long been demanding the rationalisation of multiple GST slabs. The GST Council is expected to mull ways to rationalise GST rates and bring down the number of slabs in Friday's meeting.
Amnesty on delayed returns likely
In a move that is likely to provide huge relief to small taxpayers and micro and small enterprises in the country amid the pandemic, the GST Council is likely to announce an amnesty scheme on late fee in GST return filing in the upcoming meeting on May 28. The scheme will cover all pending GSTR-3B returns since the launch of GST on July 1, 2017, till the month of April this year.
GST on vaccines, medical devices and health services
GST Council is likely to provide tax relief on a number of COVID management equipment like medical grade oxygen, oxygen concentrators/generators, pulse oximeters and COVID testing kits. It may, however, leave out vaccines and a wide variety of other pandemic relief equipment like PPE kits, N95 masks, ventilators, hand sanitisers and RT-PCR machines, among others, even as the pandemic continues to ravage the country.
As per the recommendations of the rate fitment committee, which advises the GST Council on the tax slab changes, only four COVID-related items could see changes in the tax structure. In doing so, the committee has left out over 10 COVID-related items from tax relief, most importantly, vaccines.
The GST Council is likely to reduce the tax rate on medical grade oxygen, oxygen concentrators/generators, pulse oximeters, and COVID testing kits from 12 per cent currently to 5 per cent.
GST Council may cut tax on shipping MRO
The GST Council is likely to reduce GST on maintenance, repair, and overhaul (MRO) services in the shipping sector from the current 18 per cent to 5 per cent in order to align the tax rates with competing nations like Singapore, United Arab Emirates (UAE) and Sri Lanka in the sector.
Extension of GST filing deadlines
The finance ministry had earlier in May extended timelines of several GST compliances for March and April in the wake of the ongoing COVID-19 pandemic. Since many states have announced local lockdowns until the end of May, the GST Council may announce another extension for the month of May and June.
Rate cut on two-wheelers
The GST Council is likely to mull slashing the current rate of 28% on two-wheelers in a bid to boost the sales impacted by the coronavirus pandemic. The council is also expected to give the option of availing input tax credit to a select few sectors such as real estate, hospitality, etc., which have been hit hard by the ongoing pandemic. In addition, natural gas may also be brought under the ambit of the GST regime.
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