38th GST Council Meeting

The 38th GST Council meeting was being held on 18 December 2019, Wednesday. It was chaired by our Hon’ble Union Finance Minister Nirmala Sitharaman and conducted at New Delhi where they discussed various highlights for the industries on fabrics and realty.

Key Highlight from 38th GST council meeting

GST Council meeting: The GST Council has voted to tax lotteries under the highest slab of 28 percent in its ongoing meeting on Wednesday. This uniform GST rate for lotteries will be implemented across the country. In its meeting chaired by Finance Minister Nirmala Sitharaman, the GST Council is expected to announce measures to boost the real estate sector and revenue shortfall. Other proposals on the agenda include a refund for exporters. Speculations are rife that the GST Council may also impose 2 percent cess on certain goods, which fall under 5-18 percent tax slabs, though there's little clarity on it.

Earlier today, the Finance Minister held pre-Budget consultations with chief ministers of Goa, Haryana, and Puducherry, Deputy Chief Ministers of Arunachal Pradesh, Bihar, Delhi, Tamil Nadu, and Tripura and 17 finance ministers/ministers representing their states.

Latest updates from 38th GST council meeting

• 05:31 pm: 

GST Council votes on the lottery tax rate. The GST Council voted on a matter for the first time during its meeting. The panel voted in favor of a single GST rate of 28 percent for lotteries.

• 05:25 pm: 

Minister of State for Finance Anurag Thakur and along with finance ministers from states and union territories are also present with FM Nirmala Sitharaman at the ongoing GST meeting.

• 04:41 pm: 

The GST Council could decide on measures to shore up a shortfall in tax revenue. Earlier this week, in a meeting with senior tax officials, the Finance Ministry had laid down a monthly GST revenue target of 1.1 lakh crore for the next four months. Out of these four months, one month needs to have tax collection amounting to 1.24 lakh crore, revenue secretary Ajay Bhushan Pandey had told tax officials. On the back of this development, the GST Council could take steps to ensure better compliance, easier return filing, and curbs to tax evasion.

• 04:27 pm: 

The tentative agenda for the meeting includes measures to boost the real estate sector and shore up the revenue shortfall. The all-powerful panel of finance ministers could also take a decision on refund for exporters and uniform tax rates on lotteries.

• 04:09 pm: 

The FM chairs the 38th GST Council meeting in New Delhi.

Expectations from 38th GST Council Meeting

• The Goods and Services Tax (GST) Council is concerned about meeting revenue targets, as a consequence of which it will start extensively reviewing the GST rate structure in the meeting to be held in the second fortnight of December 2019.

• In the recent update, the industries have given a hint of an increase in GST rates of mobile and fabrics to take the overall GST collections to a certain hike. There may be a discussion about the GST rates of mobile and fabrics in the coming GST council meeting. The GST council will be discussing the overall tax scenario for the products and services in the 38th GST council meeting.

• It will be an all-inclusive review that will consider GST rates, GST exemption, compensation cess as well as measures to increase revenue. Besides, suggestions and feedback from state governments solicited by the GST Council secretariat will also be well-thought-of in the GST council meeting.

• GST Council secretariat wrote a letter to state GST Commissioners, seeking their advice and proposals on measures to increase compliance and improve tax structure. This indicates the rise in the effectiveness of GST rates. The letter reads, “I would request you to provide your suggestions or inputs or proposals as regards measures on compliance as well as rates which would help in augmenting revenue.” In the same meeting, rate assessment to pitch into an inverted tax system, measures to boost compliance and revenue other than the measures currently under-enforcement, will also be reviewed.

• The Government has taken this move in the wack of complaints by states that the government is putting off compensation payments because of the slowdown in revenue. GST collection has increased by 6\\% and crossed 1 lakh crore rupees in November due to increased sales in the festive period. But, the impact of the decline in GST collection in the two consecutive months before November is inescapable.

• The letter highlighted that reduced GST compensation cess collections have been a worrisome affair in the last few months. Compensation needs have increased and are improbable to be fulfilled from the compensation cess, it added.

• On 30th November, Finance Minister Nirmala Sitharaman told that simplification of the GST rate is under consideration, at the ET Awards for Corporate Excellence. “As regards the rationalization of taxation… too many rates, too many high rates and so on, we are having good conversations with all the states,” FM said. The Government of India (GOI) wants to keep the necessities under the lowest GST rate if GST exempted. “But for the rest of them we are trying to rationalize,” she said.

• There are seven slabs for GST rates with more than 1300 goods & 500 services under four GST slabs of 5\\%, 12\\%, 18\\%, and 28 \\%. Most of the goods & services fall under the GST rate slab of 12\\% and 18\\%. So, GOI is pondering over unifying these two rate slabs into one of 15\\%. “Possible hikes in the cess to manage the compensation payouts to states and some rate changes in exempted and low rate items could figure as revenue augmentation measures in the next GST Council meeting slated for this month,” stated MS Mani, partner, Deloitte. 

• The government has taken several measures to increase compliance without increasing the tax rates. These measures include the adaptive integration of technology to catch tax evaders and data analytics to conclude the GST collection and behavior of tax defaulters. “As such, unless the government is willing to consider taxing education and healthcare, there may not be many items under an exempt schedule that can be brought under GST easily,” expressed Pratik Jain, national indirect taxes leader, PwC. “However, on the compensation cess, the government might be running out of options as states need to be compensated for the revenue shortfall, which is higher than expected,” he added.