The 52nd GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman in New Delhi.
Key Takeaways from the Recent GST Council Meeting
- The GST Council recommends a nil rate for millet flour in powder form, containing at least 70% millets by weight when sold in loose form. If sold in pre-packaged and labeled form, the rate will be 5%.
- The GST Council recommends that Extra Neutral Alcohol (ENA) used for manufacturing alcoholic liquor for human consumption be kept outside the GST.
- The GST Council has approved an amendment to clarify that the GST on ENA for industrial use will be 18%.
- ENA is high strength potable alcohol used as the primary ingredient for making alcoholic beverages after dilution with water. Ideally, the industry would have preferred all types of alcohol, including the finished product, to be under GST to ensure equal taxation across states.
- The council will discuss the roadmap for cess in the upcoming meetings as the period for compensation to states has ended.
- Some states, including Delhi, have raised the issue of tax notices sent retrospectively to states that could hamper the startup sector.
- The GST Council recommends reducing the GST on molasses from 28% to 5% to provide relief to cane farmers for faster clearance of dues and to reduce the cost of manufacturing cattle feed.
- The council recommends issuing a circular to clarify the admissibility of export remittances received in the Special INR Vostro account for input tax credit.
What is the Goods and Services Tax (GST)?
- In 2000, the Kelkar Task Force on Indirect taxes proposed the implementation of a nationwide GST in India.
- The main goal was to replace the existing complicated and fragmented tax structure with a simplified and unified system that would promote economic integration, reduce tax cascading, and simplify compliance.
- The GST system operates with a dual structure that includes the Central GST (CGST) and State GST (SGST), which are levied concurrently by the Central and State governments.
- Additionally, an Integrated GST (IGST) is imposed on interstate supplies and imports, which is collected by the Central Government but allocated to the destination state.
Constitution Amendment Act for GST
The Constitution (122nd Amendment) Bill, 2014, was introduced in Parliament after much deliberation and negotiations between the Central and State Governments. After being ratified by the required number of States, the Bill received the assent of the President on September 8th, 2016.
It has since been enacted as the 101st Constitution Amendment Act, 2016.
What is the Goods and Services Tax (GST) Council?
- According to Article 279A (1) of the amended Constitution, the President must approve the formation of a council within 60 days of the commencement of Article 279A. On September 10th, 2016, a notification was issued to enforce Article 279A from September 12th, 2016.
- After the GST Bill received assent, the Union Cabinet held a meeting on September 12th, 2016, and approved the establishment of the GST Council and its Secretariat. In addition, Finance Minister Shri Arun Jaitley scheduled the First Meeting to take place on September 22nd and 23rd, 2016, in New Delhi.
Head of the Goods and Services Tax (GST) Council
The Union Finance Minister is chairperson of the Goods and Services Tax (GST) Council.
Members of the Goods and Services Tax (GST) Council
The Minister of Finance or Taxation nominated by each State Government, or the Union Minister of State in charge of Revenue or Finance.
What is the GST Network (GSTN)?
GST Network (GSTN) is a non-profit company that provides the IT infrastructure for the GST system. This includes taxpayer registration, return filing, and tax payments.