NEW DELHI: While the Centre will be asking states to agree to new, higher GST rates and merging of two rates in a meeting of the GST Council slated for next week, the states will seek timely payment of compensation by the Centre for lower GST revenues realised by states, and raise the issue of GST anomalies that have had a deleterious effect on industry in the states.
State government officials attending the meeting between the Centre and state officials on GST said the delayed payment by the Centre was playing havoc with their finances. They also said they were not in favour of “further tinkering with rates” and wanted anomalies addressed to encourage production.
For instance, while the GST on electric cycles has been lowered to just 5 per cent, GST on bicycles has been kept at 12 per cent. With cycle sales hit, states with significant bicycle production want this anomaly to be resolved as they feel e-bikes are a rich man’s fancy while cycles are for the rural masses.
More than just cycles, a host of products have an anomalous situation where the raw materials that go into manufacturing the finished products are being taxed at rates higher than those for the finished products. “This gives rise to a strange situation, which defeats the concept of goods being vattable. Anomalies in the GST set-up have to be sorted out,” said Sumit Dutt Majumder, former chairman of the Central Board of Excise and Customs.
State and Central officials who met here said that on the table were proposals from the Centre to raise the lowest tax rate of 5 per cent to 6 per cent or 8 per cent for some products, as well as a proposal to replace the two rates of 12 per cent and 18 per cent with 15 per cent.Central officials also sought to gain acceptance for proposals to remove tax exemptions for some products and impose cess on top of GST for certain services.
proposals to tweak GST slabs
State and Central officials said that there were proposals from the Centre to raise the lowest tax rate of 5 per cent to 6 per cent or 8 per cent for some products, as well as a proposal to replace the two rates of 12 per cent and 18 per cent with 15 per cent.