Comments
GST Council will meet on December 31. This will be the 46th meeting and likely to discuss various issues, including the new taxation regime for textile and footwear. Also, GST on ice cream parlour is expected to figure in the agenda for the meeting. However, the meeting is unlikely to take up the rate rationalisation issue as the Group of Ministers (GoM) is yet to finalise its report.
The Council, in its previous meeting, recommended the end of an inverted duty structure (higher rate on input and lower rate on final products). Accordingly, all the textile products, including readymade garments and footwear, irrespective of MRP (Maximum Retail Price) will attract GST at the rate of 12 per cent from January 1. A formal notification has already been issued in this regard.
However, trade and industry are worried over the implication of the new regime. They think such a move will hurt the textile industry in a big way as GST will go up by 7 per cent on various textile items, including readymade garments with an MRP of less than ₹ 1,000. Some States are also protesting against such a move, and they want GST Council to reconsider this decision.
Any change in the decision is possible only by GST Council. Ice cream companies have urged for clarification on the applicability of GST at the rate of 18 per cent on the parlour.
Officials said that the matter is expected to be placed before the GST Council. Based on its recommendation, a clarification is expected to be issued. The Council, in its meeting on September 17, made it clear that Ice cream parlour sells already manufactured ice- cream and such supply of ice cream by parlours would attract GST at the rate of 18 per cent.
Following this, on October 06, Finance Ministry issued a clarification saying that ice cream and do not cook/prepare ice cream for consumption like a restaurant, it is the supply of ice cream as goods and not as a service, even if the supply has certain ingredients of service. Accordingly, it is clarified that ice cream sold by a parlour or any similar outlet would attract GST at the rate of 18 per cent.
Meanwhile, the Council may consider giving more time to the Group of Ministers, with Karnataka Chief Minister Basavraj S Bommai as Convenor on rate rationalization. The GoM is yet to finalised its report.
The seven-member group was constituted in September and asked to give its report within two months. It has already held two meetings but has yet to finalise its report.
As on date, there are multiple rates comprising of four main – 5, 12, 18 and 28 per cent and some special rates such as 0, 0.25, 1 and 3 per cent. There has been thinking for a long time to bring down a number of rates and one such thinking was to merge 12 and 18 per cent and go for the rate of 15 per cent. There were various other combinations also being thought of.
Other terms of reference for the GoM on rate rationalisation include reviewing the supply of goods and services exempt under GST to expand the tax base and eliminate breaking of ITC (Input Tax Credit) chain and review the instances of inverted duty structure.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.