Latest news with #GSTCouncil
Hindustan Times
12 minutes ago
- Business
- Hindustan Times
GST Council may take up removal of 12% rate
The GST Council could discuss, at its next meeting, a proposal to rationalise Goods and Services Tax (GST) rates by reducing the number of slabs from the current four to three by removing the 12% tax slab, people familiar with the matter said, asking not to be named. There is a 'near consensus' among officials and experts advising the Group of Ministers (GoM) discussing rate rationalisation that the 12% slab has little continued relevance, and essential items used by common people could be placed in preceding slab of 5% and rest could be shifted to the next 18% slab, the people added. 'This could be the most plausible way to undertake a revenue neutral tax rate rationalisation exercise. However, the GST Council has to take a final call,' one of the people said. The GST Council, which is the apex decision-making body on indirect tax regime, is expected to meet either in June-end or July. The body, comprising the Union finance minister and finance ministers (or senior ministers) of states, has not met since December 2024 and will likely consider proposals related to the rate rationalisation along with other issues, including further ease of compliance, the people cited above said. The GoM on rate rationalisation was first constituted on September 24, 2021 as per the decision of the 45th GST Council meeting held in Lucknow with the mandate of rate rationalisation, simplification of tax structure and correcting duty inversions. At first ,its convener was former Karnataka CM Basavaraj S Bommai. Later, in November 2023, the convenorship went to UP finance minister Suresh Kumar Khanna. After that Bihar deputy CM Samrat Chaudhary became its convener on February 27, 2024. The decision to do away with the 12% slab is endorsed by most Union and state government officials, experts and GoM representatives , the first person added. Currently, India has a four-slab GST regime – 5%, 12%, 18% and 28%, broadly following the principle of lower tax on necessities and higher tax on luxury items. The poor are protected with zero tax on essentials such as unpacked food items, salt, milk, fresh vegetables, educational and health services. The 12% tax slab includes items such as condensed milk, caviar and caviar substitutes prepared from fish eggs, drinking water packed in 20 litre bottles, walkie talkies, tanks and other armoured fighting vehicles, contact lenses, cheese, dates and dried fruits, frozen vegetables, sausages and similar meat products, pasta, jams and jellies, fruit juice-based drinks, namkeens including bhujiya, curry paste, mayonnaise, tooth powder, feeding bottles, carpets, umbrellas, caps, bicycles, specific household utensils, furniture made of cane or wood, pencils and crayons, handbags and shopping bags made of jute or cotton, footwear priced lower than ₹1,000, diagnostic kits, and marble and granite blocks. Services attracting 12% GST include specified construction work,hotel rooms up to ₹7,500 per day, transport of passengers by air —with or without accompanied belongings -- in non- economy classes, certain types of multimodal transportation, and specific professional, technical and business services. Experts welcomed the idea of scrapping the 12% slab. Saurabh Agarwal, tax partner at consultancy firm EY India said: 'The upcoming GST Council meeting will focus on rate rationalisation, with indications that the Council may eliminate the 12% slab in favour of a simplified three-rate GST structure. This change could enhance compliance, reduce classification disputes, and improve efficiency.' Agarwal added that the exercise will require balance, because revenue neutrality (the changes not having any impact on the overall tax revenue) is key. 'Revenue neutrality is essential, as the 12% slab currently includes mass-consumption goods and industrial inputs. Transitioning these to the 5% or 18% slabs will have varied revenue implications, requiring careful assessment to maintain accessibility. The inflationary impact is also a concern. Moving items from the 12% to the 18% slab could raise costs for semi-essential goods, potentially burdening consumers. A phased approach is necessary to mitigate price increases.' Additionally, classification challenges may arise during the transition, leading to interpretational issues for businesses, Agarwal said. 'Clear guidelines will be crucial to ensure a smooth shift. Aligning with global practices, many advanced GST/VAT regimes use one or two standard rates. Thus, adopting a three-rate structure would bring India closer to these standards while allowing for socio-economic flexibility,' he said. 'In summary, while a simplified GST structure is promising, its success will depend on careful design and stakeholder consultation.' According to experts, continued growth in gross GST revenues supports the need for rate rationalisation. Gross GST revenues saw over 9% jump to ₹22,08,861 crore in 2024-25 as compared to ₹20,18,249 crore in 2023-24. The new financial year saw record collection in the month of April this year at ₹2,36,716 crore. The revenue in the next month (May 2025) also was the third highest ever at ₹2,01,050 crore.
Mint
2 days ago
- Business
- Mint
GST mop-up: The signals for India's economy & taxes
Goods and services tax (GST) collections are buoyant, exceeding ₹2 trillion in the past two months. Mint looks at what they indicate about the state of the economy. Is it time to go ahead with the overdue rationalization of GST rates? Also Read | Who is liable if a friendly chatbot 'abets' suicide? How good are the GST collections? In April, gross GST collection was at a record high of ₹2.36 trillion. It reflected the transactions in the month of March, which, being the last month of the fiscal, saw firms pushing sales to achieve their annual targets. Not many expected similar numbers in May as transactions in April typically suffer from the 'hangover effect' of strong March sales. But the May collection came at ₹2.01 trillion. If one normalized March collection of ₹1.96 trillion, which pertains to a 28-day February, GST revenues have exceeded ₹2 trillion for three straight months. In the six months preceding that, GST collections topped ₹1.75 trillion on average. Also Read | YouTubers vs ANI: Fair-use in the spotlight What do the buoyant GST numbers indicate? GST is the most accurate and broad-based barometer to measure domestic consumption in the economy. GST collections from domestic transactions have been rising. They grew 8.4% in December, 10.7% in April and 13.7% in May—further evidence of the fact that consumption in the economy is improving. Other indicators have suggested that rural demand, which had been subdued since the pandemic, has revived thanks to good monsoons and better crop realizations. Urban demand is also showing signs of revival as lower inflation and tax breaks have left more cash in the hands of people. What is the near-term outlook? Experts refrain from hazarding a guess as GST collection depends on how the economy is doing. But recent trends indicate a steady increase. In 2023-24, GST collections typically averaged around ₹1.4 trillion. Last year it was at ₹1.8 trillion levels. Given this, experts do not rule out ₹2 trillion per month as the new normal in the fiscal year 2025-26. Also Read | Dr AI is here, but will the human touch go away? The GST on imports is rising, is it a worry? It is unclear. GST on imports shot up 20.8% in April and 25.2% in May. This indicates a surge in imports. But the nature of imports is unclear—final products meant for domestic consumption or intermediary products for processing and re-export? The government does not share sectoral GST data. With the US imposing high tariffs on China, dumping of Chinese goods is a concern. At the same time, tariffs give India a competitive advantage. Surge in imports could be to meet higher export demand. Is it time for GST rate rationalization? Yes. The government has always maintained that the GST Council would initiate the simplification of the GST rate structure once the indirect tax stabilizes. Now that it has, the government should cut down the multiple rates that complicates the tax. Experts see the possibility of two changes. The 12% tariff rate, which accounts for less than 4% of GST revenue, could be ended and the compensation cess, levied on tobacco and auto sales, could end as of March 2026 or continue under a new name such as health cess or a green cess.
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Business Standard
2 days ago
- Business
- Business Standard
GST Council may reclassify key intermediaries as exporters in next meeting
"With the Law Committee's approval expected shortly, the GST Council's final decision in its next meeting could mark a turning point for India's intermediary-driven export sectors," said the official New Delhi The upcoming 56th Goods and Services Tax (GST) Council meeting may approve a proposal reclassifying intermediaries — including brokers, agents, and digital platforms — as exporters, granting their services a zero-rated status, said a senior government official. The move is aimed at alleviating an 18 per cent GST burden on such entities. The issue is likely to be taken up for final approval after the Law Committee's nod, paving the way for significant financial relief to such firms. 'With the Law Committee's approval expected shortly, the GST Council's final decision in its next meeting could mark a turning point for
Times of Oman
3 days ago
- Business
- Times of Oman
India: GST collections in May 2025 up 16.4% to Rs 2.01 lakh crore
New Delhi: The gross Goods and Services Tax (GST) collection rose 16.4 per cent to Rs 201,050 crore, according to official data released on Sunday. In May 2024, the collections were to the tune of Rs 172,739 crore. In the month of May, collections of CGST, SGST, IGST, and cess all rose year-on-year. So far in April-May 2025-26, the GST collections were at Rs 437,767 crore, up 14.3 per cent from Rs 383,006 crore in the same period last year. GST collection in 2024-25 stood at Rs 22 lakh crore, up 9.4 per cent year-on-year. During the financial year 2023-24, the total gross GST collection was recorded at Rs 20.18 lakh crore, with an 11.7 per cent increase. The recent GST collections reflect a positive trajectory for India's economy, underscoring robust domestic consumption and buoyant import activity. The figures bode well for the country's fiscal health and economic recovery efforts, signalling resilience amidst global uncertainties. The Goods and Services Tax was introduced in the country with effect from July 1, 2017, and states were assured compensation for loss of any revenue arising on account of the implementation of GST as per the provisions of the GST (Compensation to States) Act, 2017 for five years. Hair oil, toothpaste, soap; detergents and washing powder; wheat; rice; curd, lassi, buttermilk; wristwatches; TV up to 32 inches; refrigerators; washing machines, mobile phones, are among key items on which GST rates have been slashed substantially, or for some kept at zero, benefiting people of this country. The GST Council, a federal body comprising the Union Finance Minister as its Chairman and Finance Ministers of all States as members, has played its part in the forum. The latest meeting of the GST Council was held on December 21 at Jaisalmer, Rajasthan.
Mint
3 days ago
- Business
- Mint
₹2 trillion GST revenue in May, points to strong consumer sentiment, dumping concerns
New Delhi: Central and state governments collected over ₹2 trillion in Goods and Services Taxes (GST) in May before adjusting for refunds, official data showed on Sunday, a 16% annual improvement that sustains the robust tax performance seen in the previous month. The collections in May also benefited from the strong 25% growth in gross receipt of Integrated GST or IGST—the type of GST levied on imported goods, showing strong import value growth at the beginning of the current financial year amid trade uncertainty. In April too, IGST on imports had grown nearly 21% before refunds, compared with a 13.6% growth in March, prompting some experts to flag the possibility of dumping of goods into India by other countries as the Trump tariff announcement came in April. Also read: Government drove capex in pre-election year as private sector held back IGST accounted for about a fourth of gross GST revenue in May. GST collections from domestic sales too witnessed a strong 13.7% growth in May, faster than the 10.1% nominal GDP growth the Central government has forecast, suggesting strong consumer sentiments. Data also showed that industrialized states barring Gujarat, reported strong growth performance. While the largest state economy, Maharashtra, reported a 17% annual growth in GST revenue, Tamil Nadu reported a 25% jump, Karnataka 20% and Delhi 38%. Gujarat reported a muted 4% annual growth in May. After adjusting for tax refunds, Centre and states collected ₹1.74 trillion in May, 20.4% more than the revenue collected in the same time a year ago. In the first two months of the current financial year, net GST revenue of Centre and states grew at an average of 14%, faster than the projected nominal GDP growth for the current year. Signs of dumping? After refunds, net domestic GST revenue grew at 9.7% in May, nearly the same as in April, but the net customs revenue in May— IGST and cess on imports—grew at a spectacular 73% in May, compared with an unimpressive 5.2% in the previous month. Also read: Tax rate revamp on GST Council agenda; India to push FATF to grey list Pakistan The growth in IGST revenue from imports and the fact that export refunds are not growing correspondingly, reflect the fact that import growth far outstrips export growth, explained Vivek Jalan, founder and partner at Tax Connect Advisory Services LLP. The taxes paid on goods and services used in the products that are exported are refunded to exporters to make shipments competitive, as per policy. 'This may be a result of Trump 2.0 in as much that countries are dumping their goods in India, as they are selling less in the US. It may be required that India too may have to reciprocate, or react with anti-dumping duties in the near future on a variety of products," said Jalan. At the same time, sustained growth in the consumption tax revenue indicated positive consumer sentiments. To boost demand for goods and services in the economy, the government had announced a tax cut for middle-income earners in this year's budget which was estimated to cost the exchequer ₹1 trillion by way of forgone income tax receipts. Policymakers are also counting on above-normal monsoon, strong agriculture growth, growth supportive monetary policy and government capital expenditure to support economic growth this year. Also read: Lenders willing to offer lower rates to distressed firms since IBC took effect, says insolvency board M.S. Mani, partner indirect taxes, Deloitte India, said that tax collection in May which is better than the average monthly GST receipt in the last financial year, would provide significant fiscal headroom for the government. After refunds, the Central government collected over ₹31,000 crore, while states collected over ₹38,500 crore. Cess on luxury goods, aerated drinks and tobacco yielded ₹12,400 crore in May.
