NEW DELHI: With GST collections falling short of targets and compensation cess to states worth about `40,000 crore remaining unpaid, the government is looking at ways to bring GST-exempt items under tax net. According to sources, the GST Council meeting later this month is likely to discuss ways to improve revenue and identify GST-exempt items that can be taxed.
The next GST Council meeting will be closely watched as it is expected to take some drastic steps to boost revenue. While the GST Council’s remit is to review tax and cess rates, its focus so far has been rationalising GST by reducing levies on many items or taking them out of the list of taxable items. “The total collection has improved slightly but it is still below target.
With falling revenue, a review is required of items under exemption and cess imposed by state,” a finance ministry official said. If GST collections remain low, it will hit both the Centre and states. The Centre has already written to states seeking suggestions on rates and on exemption list for the next GST Council meeting. Food, fertiliser, certain medicines and farm tools are among the items that are currently exempt from GST.
GST revenues grew 6% in November after several months of poor collections. Total collections are still far below the estimate and officials say the mop-up has to grow over 20% each month to meet Budget targets. As of now, the shortfall is pegged at Rs 50,000 crore. Officials said the council will also discuss pending GST compensation to states, which is estimated at Rs 40,000 crore, a matter recently flagged by all the non-BJP ruled states.
“The Centre is committed to clear the pending compensation to the state. The matter will be discussed in the GST council meet,” the official added. Last month, opposition-ruled states expressed concern over delay in release of GST compensation which has put them in an acute financial position.
GST revenue grew in November
GST revenues grew 6% in November after several months of poor collections. Total collections are still far below the estimate and officials say the mop-up has to grow over 20% each month to meet Budget targets. As of now, the shortfall is pegged at Rs 50,000 crore.