The Goods and Services Tax ( GST ) Council is meeting again on June 22nd, 2024, after a long gap of eight and a half months. This meeting is expected to address key issues related to the indirect tax system – GST Regime in India.
To rationalise and rework multiple GST rates and simplify the tax structure, the Council had set up a group of ministers ( GoM ) under former Karnataka Chief Minister Basavaraj Bommai in late 2021.
GST Rate Simplification: Businesses are eager for a roadmap to simplify the complex multi-rate structure. This could involve fewer tax brackets or a complete overhaul.
Former Finance Minister Arun Jaitley had initially envisioned rate rationalisation shortly after the GST launch in 2017. He had hinted at the potential for consolidating the two standard rates of 12% and 18% into a single rate over time, describing it as a feasible suggestion during debates on GST-related bills in 2017.
Regarding which rates are likely to undergo changes, sources indicate that while the 28% slab is likely to remain unchanged, adjustments are expected for the 5%, 12%, and 18% slabs. Additionally, rectifying the inverted duty structure for the pharma companies will also be a crucial aspect of the discussion.
Read More: GST Rate Rationalization in Priority for Council in 2024-25
Online Gaming Tax Review: The 28% GST on online gaming, casinos, and horse racing is a point of contention. Industry representatives might push for a revision.
Compensation Cess Uncertainty:
Future of the Cess: Consumers and businesses alike are curious about the fate of the GST Compensation Cess expiring in March 2026. Will it be extended or replaced with a new levy?
Bommai Committee Recommendations:
Implementation Status: The Council might discuss the progress made on implementing the initial recommendations from the Bommai Committee regarding exemptions and concessional rates.
Broader Reforms Revisited: Will the Council revisit the broader rate rationalisation proposals put on hold earlier?
Operational Issues Requiring Clarification:
Online Gaming Taxation: Experts anticipate clear guidelines on taxing the online gaming sector before October 2024.
ESOP and Corporate Guarantee Taxability: Uncertainties surrounding the taxation of employee stock options ( ESOPs ) and corporate guarantees need to be addressed.
Rate-Related Clarifications: Recent legal disputes have created a need for clarifications on
various GST rates.
Overall, the 53rd GST Council Meeting is expected to address critical aspects of the indirect tax regime in India. Announcements made during the meeting will impact businesses, consumers, professionals such as tax practitioners/Chartered Accountants and the overall economic environment.
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