All eyes are on the GST Council meeting this week

NEW DELHI: Policymakers, businesses and tax practitioners will be watching events in Chandigarh closely this week as the almighty GST advice meets on the eve of the fifth anniversary of the deployment of the tax system in 2017.
While state tax offices and the Center’s indirect tax wing launch consultations on tax rates and policy changes on Monday, the final outcome won’t be known until Wednesday after a two-day brainstorming, involving the State Finance Ministers and the Union Finance Minister. Nirmala Sitharamanwho chairs the board.
For the states, the meeting is critically important as the five-year compensation for lost revenue ends this month, leaving them without the assured 14% revenue growth. Given the strained finances of several states, most finance ministers are demanding the regime continue and hoped to be able to negotiate a deal at the GST Council.
But the nationwide lockdown and economic hardship due to Covid-19 has meant the Center has had to push states to borrow to pay ‘compensation’ and force consumers to bear the luxury and sin tax for another four years and one-and-a-half years, leaving little room for negotiation.
And, with inflation soaring, upending household budgets, the Center also has its hands tied in getting states to agree to a rate rationalization — a euphemism for reworking slabs and increasing levies.
Given the current mood, what’s on the agenda for the GST meeting are rate changes for certain items, with the overall restructuring being postponed for a bit longer.
Since the last meeting, at least three groups of ministers – dealing with global changes and streamlining of rates, tax on online gambling and casinos and soundness of IT systems – have submitted their reports and some of the decisions should be based on these recommendations.

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