On Friday, May 28, Finance Minister Nirmala Sitharaman led the 43rd Good and Services Tax (GST) Council meeting through video conference. Despite the fact that one of the meeting’s key agenda items was to discuss the GST tax on COVID-related necessities, no agreement was made on the decrease of tax rates on vaccinations. The decision on COVID vaccination tax rates has been sent to a group of ministers (GOM), which would be revealed by June 8, according to the Finance Minister at a news conference following the GST Council meeting.
According to reports, the GST council has announced that small merchants would continue to file quarterly reports and that the late charge penalty for GST payment has been relaxed. The Council will appoint a committee of ministers to look into the proposed Covid cess on the pharmaceutical and electricity industries in Sikkim.
The conference was attended by Anurag Thakur, Minister of State for Finance, as well as finance ministers and senior officials from the states and union territories, according to the Ministry of Finance. States’ requests for a reduction in GST rates on important Covid-related commodities such as medications, vaccines, and other items were discussed during the conference.
The GST council meeting is being place today after an almost eight-month hiatus. Last year’s meeting, the 42nd GST Council meeting, took place on October 5, 2020.
The Council voted at its most recent meeting to extend the compensation cess for states beyond the five-year transition period in order to close the revenue deficit. The national government also declared that the borrowing option’s deficit amount was enhanced to 1.10 lakh crores from 97,000 crores.
21 states picked the first borrowing option to compensate for income shortfalls caused by the GST implementation, according to Finance Minister Nirmala Sitharaman. Ms Sitharaman underlined that the federal government was not refusing any state payments, but that states that did not choose a borrowing option would have to borrow from the market.
States were granted bi-monthly compensation under the GST statute to make up for income shortfalls in the first five years of the GST implementation, beginning July 1, 2017. As a result of the GST system’s implementation, states have lost control over indirect taxes.
The revenue loss is estimated based on a 14% yearly increase in state GST collections over the base year of 2015-16. GST revenues fell as a result of the second wave of the epidemic and the associated economic downturn, leaving states with a revenue gap.
