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In its next meeting, slated for 9th September, the GST (Goods and Services Tax) Council may decide over imposing an 18% charge on <keyword id="20157806" type="General" weightage="20" keywordseo="payment-aggregators" source="keywords">payment aggregators</keyword> (PAs) like <keyword id="20290089" type="General" weightage="20" keywordseo="Razorpay" source="keywords">RazorPay</keyword>, Stripe, PayU, Pine Labs, and more. Reportedly, these charges will be levied on small value transactions of up to Rs 2,000, which are made via <keyword id="22719132" type="General" weightage="20" keywordseo="debit-and-credit-cards" source="keywords">debit and credit cards</keyword>. Until now, all payment aggregators were exempt from GST on all transactions up to Rs 2,000. We decode what it means for you, and how it will impact your pockets. What's happening? The <keyword id="22666613" type="General" weightage="20" keywordseo="fitment-committee" source="keywords">fitment committee</keyword>, which is made up of revenue officials from both center and states, is considering levying an 18% GST on payment aggregators. This is because officials feel that PAs are mere facilitators and intermediaries for card-based transactions, unlike banks, and thus, should be brought under GST purview. At present, they are exempt on paying GST on transaction of value less than Rs 2,000. But, if the proposal goes through in the 54th <keyword id="19994390" type="General" weightage="100" keywordseo="GST-Council" source="keywords">GST Council</keyword> meeting, every transaction you make through your credit or debit cards going ahead via such PAs will become costlier. Who are payment aggregators? PAs are essentially third-party service providers that let customers pay, and allow businesses to collect payments made via UPI, credit/debit cards or more. They are the interface between the customers and the merchants, allowing customers to opt for multiple, secure payment options, and also letting merchants manage and track fund collections and refunds. For their services, PAs levy a payment gateway fee, which ranges between 0.5% to 2% for each transaction. Post demonetisation in 2016, when currency notes of Rs 500 and Rs 1,000 were discontinued with immediate effect, the government had waived off taxes on credit and debit card transactions of up to Rs 2,000, in order to boost digital payments. If GST is levied, PAs are likely to pass on this cost to merchants. Will UPI be affected? No. Currently, UPI does not currently have a MDR, or merchant discount rate. UPI will continue to remain a lucrative option for PAs and merchants, especially for transactions under Rs 2,000, since they will not attract GST. PAs charge MDR to businesses for processing credit and debit card transactions on their behalf. What will change? The move is likely to affect small businesses the most, who thrive on multiple, low value transactions. Think of this. Say you make a payment of Rs 1,500 via your credit card on Razorpay. If the PA sets its fee at 1% of each transaction, the business will have to pay Rs 15 to the PA. But now, with the potential additional 18% GST applicable, the business will have to pay Rs 2.7 more, or about Rs 17.7 to these PAs. This might not seem much at first, but compounded over multiple transactions, might snowball into a significant cost for small businesses.

GST Council mulling 18% GST on low value transactions made via RazorPay, PayPal and more. Here's how it will impact you

States which failed to submit their options before the <keyword id="3680839" type="PERSON" weightage="20" keywordseo="gst-council-meeting">GST Council meeting</keyword> in October will have to wait for at least two years to get compensation on Goods and Services Tax collection shortfall expected during the transition period, Finance Ministry sources said on Monday. The sources said that such states will have to wait till June 2022 to get compensation dues, subject to the condition that the GST Council extends the cess collection period beyond 2022. This is so because the Council is expected to adopt one of the two options given by the Centre to meet the <keyword id="2600993" type="PERSON" weightage="20" keywordseo="GST-compensation">GST compensation</keyword> needs of the states this year. The states which decide against operationalisation of the new <keyword id="9971535" type="UNKNOWN" weightage="20" keywordseo="gst-compensation-formula">GST compensation formula</keyword> will get their dues only to the extent of compensation cess collected in FY21 and distributed in proportion among all states and union territories. The balance shortfall will only be met from the collection of GST compensation cess beyond the five-year transition period that ends in June 2022. This will be subject to GST Council approval to the extension of compensation cess. The GST Council, in its 41st meeting on August 27, 2020, had decided to give its member-states two borrowing options to meet their compensation shortfall and a response time of 7 working days from the formal receipt of the detailed proposal on the options by email. Almost 15 states had submitted their options by September 15 and more have joined since. Option-1 on GST compensation brought before the Council last month allows states to borrow, under a special dispensation from the Reserve Bank of India, a sum of about Rs 97,000 crore shortfall calculated by the Centre that is directly on account of GST implementation. Option-2 allows states to borrow the entire projected GST compensation shortfall of Rs 2,35,000 crore (total shortfall of Rs 3 lakh crore minus Rs 65,000 crore collected as GST compensation cess) for FY21. So far, 21 states/UTs have expressed preference for Borrowing Option-1 proposed by the Centre. With GST Act requiring voting for any resolution regarding an option by at least 20 states, the move is expected to be adopted by the GST Council at its meeting next month. If this option is indeed adopted, all states would be able to move ahead and borrow under the scheme suggested by the Centre to meet their shortfall arising due to GST switchover. If states still opt out, they will have to wait to get full compensation. Among the 21 states/UTs which support the first option on GST compensation are Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Karnataka, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tripura, Uttarakhand, and Uttar Pradesh. Manipur, the only state which had earlier opted for Option-2, later preferred to change it to Option-1. A few more states are, also, to give their borrowing option in a day or two. However, some of them like Jharkhand, Kerala, Maharashtra, NCT of Delhi, Punjab, Rajasthan, Tamil Nadu, Telangana, and West Bengal are yet to respond to the GST Council proposal to decide their options. Under the existing GST Act, compensation for shortfall in GST collections over an agreed formula is payable by the Centre for the first five years of the operation of the new tax system from July 2017 to June 2022. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/top-ten-phishing-examples-and-tricks-used-by-companies-to-test-their-employees-cybersecurity-smarts/slidelist/78228072.cms">Top ten phishing tricks that companies are using to test their employees’ cybersecurity smarts</a> <a href="https://www.businessinsider.in/stock-market/markets/news/indian-tech-companies-hcl-tech-wipro-infosys-tcs-share-price-are-green-today/articleshow/78228700.cms">It’s not just the DWS deal, Morgan Stanley's outlook has painted HCL Tech green⁠ — along with TCS, Infosys and Wipro</a> <a href="https://www.businessinsider.in/tech/apps/news/google-hits-back-at-paytm-reiterates-that-repeated-policy-violations-will-lead-to-stricter-actions/articleshow/78229677.cms">Google hits back at Paytm ⁠— reiterates that ‘repeated policy violations’ will lead to stricter actions</a>

States not choosing GST compensation options by October will have wait another two years

A total of 13 states have so far decided on their borrowing options to meet their <keyword id="9933255" type="UNKNOWN" weightage="20" keywordseo="gst-compensation-shortfall">GST compensation shortfall</keyword> and almost all have decided to go for the first option proposed by the Centre, source said. Out of the 13, 12 states have opted for the first option, under which the Union government has offered states that they could borrow the shortfall arising out of GST implementation, estimated at Rs 97,000 crore approximately. The amount would be borrowed through issue of debt under a special window coordinated by the Finance Ministry. The first option is to ensure steady flow of resources similar to the flow under <keyword id="2600993" type="PERSON" weightage="20" keywordseo="GST-compensation">GST compensation</keyword> on a bi-monthly basis. Under this option, the Centre will endeavour to keep the cost at or close to the G-secs yield, and in the event of the cost being higher, will bear the margin between G-secs and average of State Development Loan yields up to 0.5 per cent through a subsidy. The states which have preferred to opt for this option are Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim, Tripura, Uttar Pradesh, Uttarakhand and Odisha. Only Manipur has so far opted for the second borrowing option under which states can borrow the entire compensation shortfall of Rs 2.35 lakh crore, including the Covid-impact portion, through issue of market debt. Six more states -- Goa, Assam, Arunachal Pradesh, Nagaland, Mizoram and Himachal Pradesh -- will be giving their choice in a day or two, said people in the know. A few states have submitted their views to the Chairperson of the GST Council but are yet to decide on the options, according to sources. In the 41st GST Council meeting last month, the Centre had proposed both options, so that a mechanism could be put in place as an exception this year, as Covid-19 disruptions and lower revenue collections have made it difficult for the Centre to meet its obligation on Goods and Services Tax (GST) compensation to states. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-future-retail-ril-irctc-bhel-tata-motors-adani-green-vodafone-idea-godrej-properties-sunteck-realty-and-more/articleshow/78097615.cms">Top stocks to watch— Future Retail, RIL, IRCTC, BHEL, Tata Motors, Adani Green, Vodafone Idea, Godrej Properties, Sunteck Realty and more</a> <a href="https://www.businessinsider.in/india/news/delhi-police-arrests-umar-khalid-connection-with-northeast-delhi-riots/articleshow/78097740.cms">Delhi Police arrests Umar Khalid in connection with Northeast Delhi riots</a> <a href="https://www.businessinsider.in/tech/news/tiktok-owner-bytedance-rejected-microsofts-offer-for-the-apps-us-operations/articleshow/78097018.cms">TikTok owner ByteDance rejected Microsoft's bid for the app's US operations, Oracle reportedly chosen as US 'technology partner'</a>

13 states decide on GST compensation — only Manipur opts for borrowing entire shortfall in one go

The <keyword id="6355040" type="UNKNOWN" weightage="20" keywordseo="GST-Council">GST Council</keyword> will meet here on Thursday to take up the single-point agenda of <keyword id="9025375" type="UNKNOWN" weightage="20" keywordseo="GST-compensation-to-states">GST compensation to states</keyword> affected by delays in the release by the Centre, a government official privy to meeting agenda said. The meeting was earlier proposed in July, as announced by Union Finance Minister <keyword id="129243" type="PERSON" weightage="20" keywordseo="Nirmala-Sitharaman">Nirmala Sitharaman</keyword> after the first GST Council meeting in the backdrop of Covid-19 pandemic in June. "The Council will meet tomorrow with a single-point agenda to discuss the compensation cess. Any changes in the GST rates or cess structure would also relate to how timely compensation to the states could be released," the official said. Faced with sharp decline in GST collections due to the nationwide lockdown and disruptions in economic activities across the country, one of the options before the Centre is to pay <keyword id="2600993" type="PERSON" weightage="20" keywordseo="GST-compensation">GST compensation</keyword> to states by using a portion of its borrowings. The compensation has not been paid to the states since March. Even the compensation for March was delayed and paid in late July. A legal opinion on the matter sought by the Centre from the Attorney General earlier suggested that the former is under "no obligation to pay GST compensation shortfalls to the states" and it is the GST Council which has to decide on making good the shortfall in the goods and services tax compensation fund by putting sufficient amount into it. The AG had opined that the GST Council can recommend to the Centre to allow the states to borrow on the strength of the future receipts from the compensation fund, sources said. It would, however, be for the central government to take a final decision in the matter under Article 293(3) of the Constitution. "If there is need for borrowings to meet compensation to the states and who is going to borrow? How we are going to pay for it?" the Finance Minister had said about the Council meeting in June, hinting that the fall in revenues has become a huge cause of concern for the Centre to meet its liability towards the states as per the GST legislation. Under the GST law, states are guaranteed full compensation for any revenue loss for the first five years after the introduction of the Goods and Services Tax (GST) in July 2017. The compensation is the difference between actually revenue collected and projected revenue. The projected revenue is revenue growth of 14 per cent for the states per year over the base year 2015-16. As per the GST Act, full compensation to the states has to be paid for a period of five years till FY22 only through the compensation fund that gets its money through the levy of GST compensation cess on a few items. However, with the fund not getting enough collections since August 2019, the GST compensation to the states has been delayed. The Centre is now looking at getting GST Council nod for a mechanism to finance the compensation. The situation vis-a-vis the GST revenue has worsened in April 2020, with several states indicating a shortfall in collections to the tune of 80-90 per cent of the average monthly collections during this time of the year. In fact, Delhi has said its GST collections may end up at a mere Rs 300 crore in April as against a collection of Rs 3,500 crore in the same month previous year. Other states like Tamil Nadu, Assam, West Bengal, and Andhra Pradesh are also facing severe revenue decline due to shrinking economic activities during the Covid-induced lockdown. The problem has continued into May as well. With economic activity and GDP growth projected to remain subdued for most part of FY21, the Centre is looking at all possible means on how it could meet its constitutional obligation of compensating the states for their revenue losses. After February, when the Centre released GST compensation of Rs 19,950 crore for October and November 2019, the Centre has cleared dues for December, January and February only now. In late July, the Centre released Rs 13,806 crore to the states as compensation for their revenue losses in the GST goods regime for March 2020. "The total amount of compensation released for the year 2019-20 is Rs 1,65,302 crore whereas the amount of cess collected during the year 2019-20 was Rs 95,444 crore," a government statement had said. The monthly compensation requirement for the states in 2020-21 is pegged at Rs 20,250 crore, government sources said, which leaves a big gap between what needs to be paid and what is getting collected. Even in FY21, monthly cess collections could be at a low Rs 7,000-8,000 crore, or even lower. According to previous releases of the Finance Ministry, in the FY 2017-18, a total GST compensation cess of Rs 62,611 crore was collected, of which Rs 41,146 crore was released to the states/UTs as GST compensation. In the FY 2018-19, Rs 95,081 crore was collected as GST compensation cess, of which Rs 69,275 crore was released to the states and UTs as GST compensation. As on March 31, 2019, Rs 47,271 crore collected as GST compensation cess remained unutilised after the release of GST compensation to the states and UTs in the FYs 2017-18 and 2018-19. Since the end of August 2019, the central government has started realising the impending precarious position in paying the GST compensation to the states and UTs as the compensation cess requirement was twice of the average monthly cess collection. The sources said that though the GST Council also has the option to either bring in more items under the cess base by expanding the base of GST cess items, or to increase cess rate on the existing items. Any increase in compensation cess on a few items could yield only about Rs 2,000-3,000 crore a year. Therefore, the Council in its earlier meeting also discussed other options like forego full cess compensation, which was increasing @14% per annum, or to go ahead with whatever compensation is available. One more option looked at was to raise the tax rate on items through rationalisation via shuffling of slab rates. SEE ALSO: <a href="https://www.businessinsider.in/personal-finance/news/if-you-have-a-bank-loan-that-you-are-unable-to-pay-restructuring-is-on-its-way/articleshow/77391894.cms">If you have a bank loan that you are unable to pay, restructuring is on its way</a> <a href="https://www.businessinsider.in/finance/banks/news/loan-moratorium-still-ends-on-aug-31-while-supreme-court-gives-the-government-another-week-to-clarify-if-accrued-interest-should-be-waived/articleshow/77758597.cms">Loan moratorium still ends on Aug 31 while Supreme Court gives the government another week to clarify if accrued interest should be waived</a>

GST Council meet on Thursday to figure out how states will be compensated for delays in payment

New Delhi, Dec 18 () Most of the states opposed change in slabs or hike in GST during the crucial GST Council meeting on Wednesday arguing an increase in the levies would have adverse implication for the economy facing slowdown, said sources.
 The GST Council, comprising state finance ministers and headed by Finance Minister Nirmala Sitharaman, is the highest decision-making body on the indirect tax rates.
 As consensus eluded, the Council for the first time exercised the option of voting to decide on the GST rate on lottery as the economy is in downturn.
 State finance ministers also expressed concern over a decline in revenue collection and delay in payment of GST compensation.
 Sources said state ministers pointed out that moderation in revenue collection through GST was due to economic slowdown and not because of lower GST rate.
 "The rate enhancement or slab change at the moment would be a knee-jerk reaction. States were of the view that first plug all the loopholes that are there in the system and improve compliance", Delhi Deputy Chief Minister Manish Sisodia said coming out from the 38th GST Council meeting here.
 A committee of officials on revenue augmentation has submitted report which has suggestions with regard to slab change and rate enhancement.
 During the pre-Budget consultation with the Union finance minister, West Bengal Finance Minister Amit Mitra said states pointed out that social expenditure is coming down phenomenally.
 "The upcoming Budget cannot have social expenditure decline which is like punishing the common people. Stagflation is knocking at our door and we are concerned that next Budget will not be able to address it," Mitra said.
 He further said it appears from the Centre's presentation during the meeting that by February next year, there will be no money with the Centre to pay compensation
 Punjab Finance Minister Manpreet Singh Badal said the key concern as far as the states are concerned was whether they would be getting compensation at time.
 He said they were aware that revenue position was grim but "were not aware" that it was grim to an extent where the Union finance minister could not give an assurance in the Council whether states would be paid on time or not.
 "As far as I am concerned, I think it is just close to a sovereign default where the Government of India is unable to pay its constitutional obligation. It is a sad day," he said.
 Badal, however, added that it was not situation to get into panic mode.
 "Things can be fixed. I want to say they need to be fixed quickly," he said.
 Addressing media after five-hour long meeting, Sitharaman said the presentation made was based on discussions in the committee of officers of state and the Centre on revenue augmentation.
 "They have just come up with one first shot of data since the time GST has been implemented till today and based on different options of if the growth rate is this or if the growth rate to something else, how will it be and gave a first picture and the Council and the ministers agreed that on this, they have mull over for some time and then come back," she said.
 So, this was the first presentation, which is a preliminary presentation, with the no indirect or direct suggestion, on rate increase or rate reduction, she said.
 Sitharaman also said the additional information that they have asked all put together in the next meeting, there will be a detailed discussion. "So, first thing was this presentation of the committee of secretaries officers did not suggest, directly or indirectly increase or decrease as a proposal."
 "It was matter of fact presentation of data and data alone. And based on that some projection on revenue collection and on compensation cess collection. And that's about it. I hope that's clear," she added. DP NKD CS HRS

GST Council meet: Most states were opposed to change in slabs, hike in GST

As the centre is all set to make GST operational by next April and discard the traditional tax levying in buying a product or service, it’s still not decided on state’s share. Though the panel met yesterday, they didn’t reach a consensus on the same. 
As per news reports, the next meeting has been fixed on November 24-25. However the committee would sit informally on November 20 as well. The meeting called on 9-10 November to take a decision on draft law has been cancelled. 
 
Yesterday’s meeting has agreed on 4-tier GST structure of 5%, 12%, 18% and 28%. 
 <keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> has shown his interest to resolve all differences and the delay while laying out the work programme ahead. He reiterated the government's commitment to stick to the April 1 rollout plan. 
 "Five proposals were put forth. Today we narrowed down to two. We did not want to rush through this as all pros and cons have to be finalised," <keyword id="6390789" type="COMPANY" weightage="100" keywordseo="Jaitley">Jaitley</keyword> told the <keyword id="6474066" type="COMPANY" weightage="20" keywordseo="economic-times">Economic Times</keyword> after the meeting of the <keyword id="6355040" type="ORGANIZATION" weightage="20" keywordseo="GST-Council">GST Council</keyword> ended. "We will have informal meeting without aides and officers to a find a political solution..." 
 
The two proposals are on how to divide the assesses. 
 "...whatever the option is, we don't want to take it in a hurry because it has to be a well thought out decision. Because administratively, any mistake on this front could be chaotic," the minister told the ET whose consensus-building approach has been appreciated by <keyword id="6359922" type="CITY" weightage="20" keywordseo="States">states</keyword>. 
In case of differences, the GST Council provides for putting the matter on vote and going ahead with the decision that gets three-fourths vote. 
 
The issue appeared to have been sorted out without a hitch at a September 23 meeting of the council when a cross empowerment model was agreed to. States were to have jurisdiction over assessees with turnover of up to Rs 1.5 crore, while both states and the Centre were to assess those above that. 
 
In the case of existing 11 lakh service tax assessees, the Centre was to have exclusive oversight. For new assessees, the plan was to work out a mechanism. 
 But the agreement could not be clinched at a subsequent meeting on October 19 as some states, such as <keyword id="6357783" type="CITY" weightage="20" keywordseo="West-Bengal">West Bengal</keyword>, objected to the proposal when the minutes of the first meeting were taken up. 
 
"When in the month of August we passed the Constitution amendment, it appeared too challenging because the time was very short. As of today, I am more confident than I was in August. Let me say this because bulk of the spadework has been done. Most of the decisions have been taken. Only one key decision remains," he said.

Jaitley confident of April 1 deadline of GST rollout; state’s
consensus not reached  yet

New Delhi, Mar 12 () GST rates on mobile phones, fertilisers, man-made fabrics and garments are likely to be hiked to 18 per cent in the next GST Council meeting on March 14. Experts said the rate hike would improve working capital position of the manufactures as it would correct the inverted duty structure but may lead to increase in price of the finished goods. Currently, under the goods and services tax (GST), certain manufactured goods attract a tax rate of 5 per cent or 12 per cent while their inputs, input services and capital goods attract GST at the higher rate of 18 per cent or 28 per cent. The manufacturers have to claim a refund of accumulated input tax credit (ITC) where the tax rate on input is higher than the finished goods. According to sources, the refund claimed on account of inverted rate structure is about Rs 20,000 crore per year and there is a need to correct this anomaly. Significant items in inverted rate structure are fertilisers, mobiles, footwears, man-made yarns and fabrics, renewable energy devices, and tractors. A number of other smaller items like utensils also attract inverted duty structure. "The GST Council will take up in phases the correction of inverted duty on items as per the recommendation of the officers' committee. On Saturday, 4 items -- mobiles, fertiliser, footwear and man-made fibre, fabric and garments -- would come up for correction," the official said. Currently, cellphones attract a GST rate of 12 per cent, while its inputs are taxed at 18 per cent. "There is hardly any justification for retaining mobile at the slab rate of 12 per cent, while many items like TV, torches, geyser, iron, heaters, mixer, juicers, etc, attract GST at a higher rate," the official added. In the pre-GST era, under the dual excise scheme, a manufacturer had two options for excise duty -- basic excise duty (BED) at 2 per cent or 1 per cent without CENVAT Credit, and BED at 12.5 per cent with CENVAT credit. Imported mobile phones were being subjected to additional duty of customs (equal to higher of the BED) at 12.5 per cent. In central excise, there was no provision for refund of input tax credit on account of inverted duty structure. While fertiliser was originally placed in 12 per cent slab, the Council later lowered the rate to 5 per cent. A total of Rs 6,000 crore have been claimed as input tax credit refund on fertilisers from July 2017 till date. Fertiliser manufacturers have been claiming lower rate on other inputs like ammonia and sulphur. Besides, 18 per cent rate on services and capital goods adds to duty inversion, the official added. The total pre-GST tax incidence, including central excise, tax on inputs, average VAT, CST and octroi, on fertilisers was estimated to be about 9.75 per cent. Besides, the duty inversion in man-made fibre (MMF) value chain has led to a total refund claim of about Rs 1,600 crore so far on man-made yarn and another Rs 2,300 crore on fabrics and other textile items. The MMF value chain such as polyester, acrylic and viscose has unlike GST rate structure. While fibre attracts GST at the rate of 18 per cent, their value-add products, namely yarns, attract GST at the rate of 12 per cent. Thus, there exists an inversion at fibre to yarn stage. Fabrics, however, attract GST at the rate of 5 per cent. The textiles sector currently has a differential GST rate of 5, 12 and 18 per cent. This leads to difficulty in issuing and claiming of refunds. With regard to footwear, the Council in June last year had lowered GST rate to 5 per cent on items worth up to Rs 1,000, while those above this value attract 18 per cent duty. However, inputs used by the sector attract GST rate in the range of 5-18 per cent. EY Tax Partner Abhishek Jain said, "An increase in the rate of GST for some of these products should help liquidating the accumulated credits and thereby bettering the working capital costs for businesses manufacturing these goods. However, the rate increase on these goods may result in price hike and, thereby, may impact demand of these goods." AMRG &amp; Associates Senior Partner Rajat Mohan said, "Economy is going through a rough patch and any further increase in tax rates would run negative sentiment throughout the entire sector and push the demands further down deteriorating the overall economic stability in the country." JD HRS

GST on cellphones, fertiliser, man-made fabric, garments may be hiked to 18 pc

New Delhi, Dec 11 () With pressure on revenue collection, the goods and services tax (GST) rates and slabs may be raised during the GST Council meeting next week.
 The all-powerful GST Council, headed by Finance Minister Nirmala Sitharaman, is set to meet on December 18 in the backdrop of lower-than-expected GST collection and pending compensation to many states.
 As of now, there are four slabs under the GST regime -- 5, 12, 18 and 28 per cent. Goods and services under the 28 per cent category also attract cess over and above the rate, which ranges between 1 and 25 per cent.
 A group of officers from the Centre and states, which met on Tuesday to finalise recommendations for rate rationalisation, is said to have considered various options including raising rates from 5 per cent to 8 per cent and 12 per cent to 15 per cent, sources said.
 A detailed presentation on rate rationalisation will take place during the GST Council meeting.
 The GST Council meeting is also likely to deliberate on raising cess on some products to meet the growing need of compensation, among other issues.
 The Council can explore possibility of merger of slabs to bring down the number of slabs to three, sources said.
 It is likely to revisit exemption list and explore whether cess can be levied on some services, the sources added.
 The Central GST collection fell short of the Budget Estimate by nearly 40 per cent during the April-November period of 2019-20, according to government data.
 The actual CGST collection during April-November stood at Rs 3,28,365 crore, while the Budget Estimate is of Rs 5,26,000 crore for these months.
 In 2018-19, the actual CGST collection stood at Rs 4,57,534 crore as against the provisional estimate of Rs 6,03,900 crore for the year, he said.
 In 2017-18, the CGST collection was Rs 2,03,261 crore.
 Meanwhile, India's GDP growth slumped to a 26-quarter low of 4.5 per cent in the second quarter of the current financial year as gross value added to the manufacturing sector contracted for the first time in nine quarters.
 The last time GDP grew at a slower pace was in the fourth quarter of 2012-13, when it had expanded only 4.3 per cent.
 The compensation requirements have increased significantly and are unlikely to be met from the compensation cess being collected.
 This discussion is quite critical as lower GST and compensation cess collections have been a matter of concern in the past few months, according to a letter written by the GST Council to commissioner, SGST, of all states.
 The Council has sought suggestions, inputs or proposals as regards measures, on compliance as well as rates that would help in augmenting revenue. DP HRS

GST rates may go up for various items to meet revenue shortfall

<ul><li>The effective tax rate on the <keyword id="1004835" type="PERSON" weightage="20" keywordseo="Lottery-industry">lottery industry</keyword> is at 28%. </li><li>Adding the taxes on prize money, the tax rate has tripled under the GST regime. </li><li>Excessive taxes have given birth to illegal lotteries, allege lottery sellers. </li><li>The government also collected only ₹3,725 crore of GST from lotteries and the potential is as high as ₹12,000 crore, according to the industry body. </li></ul> Sugal and Damani who market government licenced lotteries have cut two-thirds of their points of sale in the last one year, to 10,000 from 30,000. And, it is not because Indians have stopped betting on their luck, but because lotteries have turned plain expensive after the levy of goods and services tax. “Effective overall tax incidence of service tax and lottery tax was 6.71% on the face value in pre-GST whereas now it is nearly 28%,” said a press release by the lottery sellers. It is not just the tickets which are taxed, but the prize money is also heavily taxed and the industry laments that the tax incidence on it overall has increased a whopping 300%. Added to that, the centre and state also tax them differently, making the licenced lottery tickets of some states less attractive. “This huge difference in the tax rate on the same commodity acts as a tariff barrier for smaller states like Goa, Sikkim, Arunachal etc. when their tickets are sold in other bigger States like West Bengal or Kerala,” said Kamlesh Vijay, group CEO of Sugal &amp; Damani. The industry is also affected by increased illegal lotteries which are eating into their market. The GST council too has taken cognizance of the issue has been which had earlier recommended that only 5% should be charged on the face value of lottery tickets. Another option was to charge 28% on the price, after excluding the prize payout. “These has been of great concern and fears among the retailers’ employees and their families of job loss, but we are hopeful of a turnaround with support from the government,” said Vijay. And, there is something in it for the government too promises the retailer. Only ₹3725 crore of GST was collected from the industry in the last nine months, while the industry believes that as much as ₹12,000 crore should have been collected considering the 20% face value of industry which has a massive size of ₹59,600 crore per annum.

India’s ₹60,000 crore lottery industry is blaming GST for their loss of fortune

<ul><li>The meeting comes a day ahead of the meeting of the GST Council on Thursday.</li><li>According to Congress sources the opposition Chief Ministers are expected to discuss a joint effort to pressurise the government to postpone the exams at a time when the country is battling a surge in Covid-19 cases.</li></ul>Congress interim chief <keyword id="689" type="PERSON" weightage="20" keywordseo="Sonia-Gandhi">Sonia Gandhi</keyword> will speak to the Chief Ministers of the Congress ruled states and also the Chief Ministers of West Bengal Mamata Banerjee and Maharashtra Uddhav Thackeray on Wednesday to discuss the pending Goods and Services Tax (GST) share, and the <keyword id="6361994" type="UNKNOWN" weightage="20" keywordseo="NEET">NEET</keyword> and <keyword id="6392660" type="DEFINITION" weightage="20" keywordseo="JEE">JEE</keyword> examination issue. According to Congress sources, the meeting will be chaired by Sonia Gandhi through video conferencing, in which Punjab Chief Minister Captain Amarinder Singh, Rajasthan CM Ashok Gehlot, Chhattisgarh CM Bhupesh Baghel, Puducherry CM V. Narayanasamy along with the West Bengal and Maharashtra Chief Ministers will be present. The meeting comes a day ahead of the meeting of the GST Council on Thursday. According to Congress sources the opposition Chief Ministers are expected to discuss a joint effort to pressurise the government to postpone the exams at a time when the country is battling a surge in Covid-19 cases. The source said the agenda of the meeting also includes compensation to states who have reported a loss of revenue because of the GST in the time of the pandemic. SEE ALSO: <a href="https://www.businessinsider.in/science/health/news/oxford-astrazeneca-covid-19-vaccine-phase-ii-trials-will-begin-in-india-today/articleshow/77757085.cms">Oxford-Astrazeneca COVID-19 Vaccine: Phase II trials will begin in India today</a> <a href="https://www.businessinsider.in/defense/news/india-military-options-against-china-explained-by-experts/articleshow/77743778.cms">Experts explain India’s 'military options' against China</a>

Sonia Gandhi to speak to Mamata Banerjee, Uddhav Thackeray about GST share and pending NEET-JEE exams

<keyword id="6359833" type="ORGANIZATION" weightage="100" keywordseo="Goods-and-Services-Tax">Goods and Services Tax</keyword> (GST) is the biggest tax reform introduced in India since independence, and is certainly a game changer. However, the process undertaken by the government to implement GST was no less than a game changer itself. 
 
Several aspects had to be taken care of, and the most important part of the whole process was to stay focused on the bigger picture, not bowing down to the political and administrative negotiations that came with it. 
 
It was <a href="http://www.businessinsider.in/topic/Narendra-Modi">PM Narendra Modi </a>who was the leader of the process, along with finance minister <keyword id="42575" type="PERSON" weightage="100" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, who served as the bridge between him and the stakeholders. 
 
How often does it happen that the key members of the leading party of world’s biggest democracy meet up with the opposition leaders and that too a month after losing elections in a key state. However, it was the commitment that BJP had for GST that made him, along with Jaitley and parliamentary affairs minister Venkaiah Naidu had a meeting with former PM Manmohan Singh and Congress President Sonia Gandhi, a month after BJP lost Bihar elections. 
 
The PM, sources say, said that India needed GST and then the FM took over, explaining to the opposition why their positions, like capping tax rate at 18% in the GST statute, had to be reconsidered. He added that while a poor GST was not an option, their other demands will be duly considered. 
 
Also read: <a href="http://www.businessinsider.in/removal-of-cesses-for-gst-would-cost-government-rs-65000-crore/articleshow/57793686.cms">Removal of cesses for GST would cost government Rs 65,000 crore</a> 
 Ever since then, the <keyword id="117924" type="UNKNOWN" weightage="100" keywordseo="GST-Rollout">GST rollout</keyword> became a big puzzle with several tangled knots, which could be and was solved keeping in mind one thing, that GST was too big a reform to fail. The idea was to unite the country in a fundamental way, and before a deadline but only after clearing every doubt that anyone had. 
 
As per officials that <a href="http://economictimes.indiatimes.com/news/economy/policy/how-modi-government-managed-to-solve-the-gst-puzzle/articleshow/57980627.cms">ET </a>contacted, Modi referred to GST as more than a tax reform at Cabinet meetings, exemplifying India's "unity in diversity," asking his team to prioritise GST. The FM, very smartly negotiated the terms so that political rivalries didn’t hinder the implementation process. 
 
In total, <a href="http://www.businessinsider.in/gst-council-clears-almost-allrules-except-for-remaining-four/articleshow/57959857.cms">GST council </a>had 12 meetings; however, from the second meeting itself, there were signs of political bitterness raising its head, which is why the government decided to seek consensus and encourage everyone to offer solutions. 
 
While taking care of the taxation, the government had to get into intense detailing with the tax administration, which is when it demonstrated that it had no intention of cornering states. 
 
Also read: <a href="http://www.businessinsider.in/markets/economy/gst-to-keep-an-eye-on-your-perks-outside-ctc/articleshow/57889157.cms">GST to keep an eye on your perks outside CTC</a> 
 
In the whole process, the leading party is said to have never shied away from reaching out to rivals, just so the GST could be passed without fail. It involved reaching out to CPM's Sitaram Yechury, SP's Ram Gopal Yadav, TMC's Derek O'Brien, BJD's Dilip Turkey, NCP's Praful Patel, and several other point-persons from <a href="http://www.businessinsider.in/politics/delay-in-implementing-gst-during-nda-government-led-to-rs-12-lakh-crore-loss-says-congress-party/articleshow/57892537.cms">Congress party</a>. 
 
The PM had a message for his team working on GST, which was to work at top speed without compromising with the quality. The team included hundreds of officials spread in small groups, solving difficult questions of both producing and consuming states and working for a period of more than eight months, including holidays and weekends. 
 
"It took us several months and many informal discussions to reach a consensus on how the final draft should look like," said a top official. 
 
Also read: <a href="http://www.businessinsider.in/no-gst-for-education-and-healthcare-this-year/articleshow/57972964.cms">No GST for education and health care this year</a> 
 
The work of these teams should be credited for the fact that the GST framework is ready three months before the <a href="http://www.businessinsider.in/markets/economy/eyeing-july-1-rollout-arun-jaitley-introduces-four-bills-on-gst-in-parliament/articleshow/57851897.cms">July 1 deadline</a>. 
 
(Image source GST Taxation)

Here’s how difficult the GST process was for the Modi government

New Delhi, Feb 4 () The government is planning to introduce lottery offers between Rs 10 lakh and Rs 1 crore under the GST to encourage customers to take bills while making purchases.
 Central Board of Indirect Taxes and Customs (CBIC) member John Joseph said every bill under the goods and services tax (GST) regime will provide a chance to the customers to win a lottery and that would act as an incentive for them to pay the tax.
 "We have come with the new lottery system. Every bill under GST is supposed to be a price-winning lottery ticket. It will go for a draw and price are so high that people will say that by not saving 28 per cent, I have a chance of winning Rs 1 crore or Rs 10 lakh. It is a question of changing the consumer behaviour," Joseph said at an Assocham event here.
 As per the plan, the purchase bill would be uploaded on a portal and a draw would be held automatically and the winners would be informed.
 Under the four-tier GST, goods and services are taxed at 5, 12, 18 and 28 per cent. Besides, cess is levied on luxury, sin and demerit goods on top of the highest tax rate.
 The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state counterparts, would vet the proposed lottery scheme.
 The Council would also decide on the minimum threshold for bills that would be included in the lottery. As per the plan, the money for the lottery would come from the consumer welfare fund, where the proceeds of anti-profiteering are transferred.
 To plug leakages in GST revenue, the government is considering various options in business-to-consumer deals, including lotteries and incentivising QR Code-based transactions.
 The government has constituted a committee of officers to suggest measures to augment GST revenue collections.
 The panel has been tasked to suggest systemic changes in GST, including checks and balances, to prevent misuse and measures to improve voluntary compliance.
 Also, it has been tasked to give inputs on measures for the expansion of the tax base.
 The committee, which made presentation before the GST Council on December 18, suggested pruning of exempt list for raising resources. JD HRS

You Searched For "gst council options" and got 12 results

GST Council mulling 18% GST on low value transactions made via RazorPay, PayPal and more. Here's how it will impact you

Ira Alok Puranik

States not choosing GST compensation options by October will have wait another two years

IANS

13 states decide on GST compensation — only Manipur opts for borrowing entire shortfall in one go

IANS

GST Council meet on Thursday to figure out how states will be compensated for delays in payment

IANS

GST Council meet: Most states were opposed to change in slabs, hike in GST

PTI

Jaitley confident of April 1 deadline of GST rollout; state’s consensus not reached yet

BI India Bureau

GST on cellphones, fertiliser, man-made fabric, garments may be hiked to 18 pc

PTI

GST rates may go up for various items to meet revenue shortfall

PTI

India’s ₹60,000 crore lottery industry is blaming GST for their loss of fortune

Katya Naidu

Sonia Gandhi to speak to Mamata Banerjee, Uddhav Thackeray about GST share and pending NEET-JEE exams

IANS

Here’s how difficult the GST process was for the Modi government

BI India Bureau

Govt plans GST lottery offers of Rs 10 lakh-Rs 1 cr for encouraging customers to ask for bills

PTI

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