NEW DELHI: The Group of Ministers (GoM) mandated with the task of rate rationalisation, in its meeting on Friday, will discuss the issue of inverted duty structure and review the list of exempted goods under Goods and Services Tax (GST), sources in the know told The New Indian Express.
The inverted duty structure is a situation where the tax on inputs is more than the tax on final goods. “The issue of inverted duty structure on certain goods including textile is pending. There are many taxpayers who take the benefit of input tax credit by producing fake invoices. There is a need to correct this mismatch between GST on inputs and final goods,” a source familiar with the matter said. Besides this, the cash flow of the companies also gets affected due to the large accumulation of input tax credit claims, the source further said.
In addition, the GoM will also review the list of exempted goods under GST to increase the tax base. Meanwhile, the merger of slab rates will also be discussed. The government is considering to merge 5% and 12% slab rates under 8% along with shifting many items under 12% category to 18%. However, considering the current volatile situation, the decision on the rationalisation of rates may be deferred.
The 47th GST Council meeting will be held on June 28-29 in Srinagar, Finance Minister Nirmala Sitharaman office tweeted on Thursday. The meeting is going to be critical as the states’ compensation scheme is ending on June 30. The non-BJP states may take up the issue of extending the scheme beyond June in the meeting.
It may be recalled that the Supreme Court in its verdict on ocean freight had observed that the GST Council’s decisions have only persuasive value and not binding on the states. The Council will also take up the GoM’s report on online gaming, casinos, and race courses in its meeting later this month. The GoM had recommended a tax rate of 28% on these services.