NEW DELHI: The GST Council of State Finance Ministers began on Saturday and may look into the issue of filing of returns and the refund processes for small and mid-size businesses and reach a consensus on taxation as Prime Minister Narendra Modi had announced that 99 per cent of 1,200 goods and services would be brought under 18 per cent slab or less.
Taking place as it is in the backdrop of the recent Assembly elections in Rajasthan, Madhya Pradesh and Chhattisgarh, the meeting is seen by analysts as a part of the government plan to boost consumption and increase demand in key sectors of economy ahead of the Lok Sabha polls.
"We are of the opinion of making GST as smooth as possible for the enterprises. In earlier days, the GST was framed according to the existing VAT or excise tax structures exercised in those respective States. (With) the discussions held from time to time, the tax system is getting improved," Modi had said on Tuesday.
He announced that 99 per cent goods and services would be brought under 18 per cent or less GST slab and the highest tax slab will be restricted to a few select items, such as luxury and sin goods.
Presently, around 34 goods and services attract the highest GST slab of 28 per cent and people are expecting it may come down as the 2019 general elections are also round the corner.
The items on which tax rate is expected to be reduced include automobile tyres, cement, air conditioners real estate equipment and some electronic devices.
The Government is also contemplating to slash GST on cement to 18 per cent to push the construction sector.
Sources said the government may not slash tax rate on luxury hotels. The five-star hotels with room tariffs of Rs 7,500 and above come under 28 per cent GST tax slab. However, rooms between Rs 2,500 and 7,500 come under 18 per cent tax while those between Rs 1,000 and Rs 2,500 attract 12 per cent tax.
On Thursday, Finance Minister Arun Jaitley took a swipe at the Congress party and its president Rahul Gandhi, who argued for a single slab as "a stupid idea".
"Luxury and sin items can't be taxed at the same rate as the common man's item," Jaitley said.
The Finance Minister also said that the previous UPA regime had left behind a legacy of 31 per cent indirect Tax on most items.
"The GST has already reduced 334 items to 12 per cent and 18 per cent slab. Wasn't the 31 per cent tax an oppressive idea -- a stupid one at that.
" Earlier in the day, West Bengal Finance Minister Amit Mitra took a dig at Mr Modi on his GST announcement sidestepping the Council and said the Prime Minister has violated the "Parliamentary Procedure" and undermined the constitutional power of the GST Council.
"The GST Council meeting was scheduled on December 22 but on December 18, the Prime Minister announced that only 0.
5 per cent to 1 per cent of the items such as aircraft, SUVs, cigarettes and alcohol will be taxed at 28 per cent," Mr Mitra said, adding that the neutrality of the Council in decision-making has been severely eroded and it will be highly detrimental to the future functioning of the Council.
Meanwhile, former Finance Minister P Chidambaram clarified that when the Congress president said GST should be a single rate, it meant that the standard rate of GST should be a single rate.
''As Dr Arvind Subramanian's RNR report pointed out, when there is a standard rate there will also be a standard-minus rate and a standard-plus rate. That's elementary, not stupid. The stupid idea was the BJP's idea of having 8 rates when GST was first implemented in July 2017!," Chidambaram said.
He also said that if the GST Council discussed the Ease of filing returns on Saturday, then it would be an "admission" that filing returns had not been easy in the last 18 months.
"The truth is filing GST returns has been a nightmare. In the first eight months (April-November) of the current fiscal, the Government has mopped up over Rs 7.76 lakh crore from GST. The 2018-19 budget had estimated annual GST collection at Rs 13. 48 lakh crore, which means a monthly target of Rs 1.12 lakh crore.