NEW DELHI: The GST Council is likely to meet in September second half to discuss a demand from automobile manufacturers to cut Goods and Services Tax (GST) on vehicles, input tax credit for the pharma sector and a proposal to increase GST rate on premium realty projects.
"The GST Council will take a relook at certain categories, including rate cut on auto sector, which is facing a slowdown. There is also the pending issue of input tax credit for the pharma sector, which will be discussed at length," said a government official.
The finance ministry, however, is opposed to the idea of rate cuts. It has so far maintained that rate cuts will upset revenue collection. "The industry had asked for reduction in GST. But there is no headroom to do so. We cannot reduce rate on all items. If we do so, where will the revenue come from? The department has to be reasonable with tax cuts," said a senior finance ministry official.
Finance Minister Nirmala Sitharaman had last week held a series of consultations with representatives of various sectors including banking, NBFCs, auto, financial services, foreign portfolio investors, steel and real estate.
It is also likely to look at increasing the rate on premium real estate, but also restore the provision of input tax credit. "The industries have all made their recommendations and a majority had asked for lowering of GST. Currently, the government cannot take a call on this. The finance minister is looking into whether she will raise these issues with GST Council in the next meeting," the official said.
The council may also consider the healthcare industry’s demand on input tax credit. Healthcare providers have been pushing for 5 per cent GST, since in the absence of input tax credit, they end up absorbing taxes paid on goods purchased from vendors. Input tax credit is not allowed as healthcare services, except for cosmetic surgeries and hair transplants, are exempt from GST. Tax is applicable on implants and artificial limbs.
The Council had, in its February meeting, reduced tax on under-construction premium housing segment to 5 per cent from 12 per cent, and removed the input tax credit provision.