The rising chorus for tax relief is likely to be ignored by India's federal tax council as a major GST meet is scheduled to take place in Goa on Friday. The council, at its 37th meeting in Goa, will also consider states’ demand for extending the GST cess on select products like automobiles and tobacco beyond 2022 in view of the bleak revenue collection trends.
The meeting aims to provide impetus, by way of lower taxes, to segments of industry which are not big revenue contributors.
In addition, the Council will also consider a uniform tax rate for lottery tickets, which are currently taxed at 12 per cent or 28 per cent, depending on whether they are sold within the organising state or outside.
Items likely to see a tax cut include luxury hotels and outdoor catering services. Luxury hotels which charge Rs 7,500 and above per night are now taxed at 28 per cent and outdoor catering services at 18 per cent.
According to sources, GST receipts that fall below expectations have nearly killed the scope for tax rate cuts.
“The pressures of meeting revenue targets, which have been lower than expectations, would be a key consideration in any decision on reducing rates in on Friday’s GST Council meeting," said MS Mani, partner, Deloitte India.
Meanwhile, the states have argued that the central government can borrow from the market if there is a shortage of funds to compensate them and can repay this by extending the levy of GST cess by 2-3 years beyond 2022.
The fiscal pressures of central and state governments are likely to be discussed at Friday’s meeting.
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