Finance Minister Nirmala Sitharaman. (Photographer: T. Narayan/Bloomberg)
4 years ago
Dec 31, 2021
The Goods and Services Tax Council's 46th meeting is underway on Friday. The meeting comes amid demands for extension of GST Compensation for five more years. Some of the states raised the issue in the pre-budget meeting with Finance Minister Nirmala Sitharaman citing revenue shortfall and pending dues.
Compensation cess was not on the agenda today. Some state finance ministers did mention issue of extending compensation cess, said Finance Minister Nirmala Sitharaman. However, no discussions were held.
"At the moment I have nothing before me," Finance Minister said on cess period extension.
Decision on correcting inversion in textiles has been referred to rate rationalisation committee, said Finance Minister Nirmala Sitharaman. Committee's full report to be submitted in Feb. 2022.
No decision was taken by the GST Council on the issue of reversing rate hike for the footwear industry, she added.
The GST Council deferred the increase in tax on the textile industry. A uniform rate of 12% was to come into force from Jan. 1.
The issue of GST rate hike on textile industry is likely to be discussed next in February 2022, Bikram Singh, industries minister of Himachal Pradesh, told reporters.
This issue has also been moved to the Group of Ministers on rate rationalisation, Palanivel Thiaga Rajan, finance minister of Tamil Nadu, told reporters.
A uniform rate on yarn, fabrics and apparel was aimed at addressing the inverted tax structure—a higher rate on raw materials than on finished goods—in the textile value chain.
Like man-made yarn and fibre are taxed at 2-18% compared to 5% GST on fabric. That led to accumulation of GST credit.
