GST Council meeting tomorrow: Agenda, what to expect from FM Nirmala Sitharaman

The 46th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, will meet tomorrow, December 31 and discuss, among other things, report of the panel of state ministers on Goods and Services Tax (GST) rate rationalisation.

The meeting, which is scheduled to start from 11 am tomorrow at Vigyan Bhawan in New Delhi, will be a physical one. It will likely discuss correction in duty inversion in certain goods. According to an official, the upcoming GST Council meet will be an extension to the pre-budget meeting with state finance ministers held earlier today.

Sitharaman chaired the pre-Budget consultations with finance ministers of all states and union territories for the upcoming Union Budget 2022-23. The meeting was also attended by Minister of State for Finance Dr Bhagwat Karad, Department of Economic Affairs Secretary TV Somanathan and Department of Financial Services Secretary Debasish Panda along with other Finance Ministry officials.

The Group of Ministers (GoM) on rate rationalisation will submit report to the Council. The panel has reviewed items under an inverted duty structure to help minimise refund payout.

Besides, the Fitment committee, comprising tax officers from states and the Centre, has made many ''sweeping'' recommendations to the GoM regarding slab and rate changes and taking items out of the exemption list, reported news agency PTI earlier.

As per the preliminary report, FM may hold a press conference tomorrow after 3  pm on the outcome of the meeting.

The meeting comes amid demands of several industry bodies and state ministers to roll back a proposed hike in textile from 5 per cent to 12 per cent.

To recall, the union government had notified to increase the tax on natural fibre products from 5 per cent to 12 per cent, including apparels in the lower tax bracket with effect from January 1, 2022.

West Bengal's former finance minister Amit Mitra has urged the Union finance minister to roll back a proposed hike in textile from 5 per cent to 12 per cent saying this would lead to closure of around one lakh textile units and 15 lakh job losses.

Telangana Industries Minister K T Rama Rao has also urged the Centre to withdraw its proposed plan to increase GST rates.

The industry has also opposed the rise in tax from five per cent, citing higher compliance cost especially for the unorganised sector and MSMEs besides making the poor man's clothing expensive.

Moreover, there have been demands for merging the 12 and 18 per cent slabs as also taking out certain items from the exempt category to balance the impact of slab rationalisation on revenue.

Currently, GST is a four-tier slab structure of 5, 12, 18 and 28 per cent. Essential items are either exempted or taxed at the lowest slab, while luxury and demerit items attract the highest slab. On the top of the highest slab, a cess is levied on luxury and demerit goods.

With inputs from agencies