As the Goods and Services Tax (GST) system nears five years of completion and begins at the end of the state compensation system to cover the revenue gap, revenue-raising measures such as price rationalization, review of exemptions, and system reforms will turn out to be the main points of contention between states and the center as they converge in GST Board meeting on June 28-29.
With inflation soaring, no major adjustment to the tax boards will find favor in the near term, and instead the Board is likely to rely heavily on a series of other measures to increase revenue – correcting the inverted fee structure for items such as LED lights, printing/graphic ink, cutlery, spoons, powered pumps, solar water heater, prefab leather composite works, tow exemption for items such as prepackaged and labeled food items such as wheat flour, fluffy rice, yoghurt/lassi/milk, paneer and chilled meat/fish.
Countries, especially those governed by the opposition, are expected to raise their demand to extend the compensation system to fill the revenue shortfall beyond June 2022.
Under the GST, as a percentage of the GST (State Compensation) Act 2017, states are guaranteed to be compensated at a compound rate of 14 percent from the 2015-2016 base year for losses arising from implementation.
Last week, the Ministry of Finance notified the extension of levying and collection of compensation until March 2026, in line with the previous approval granted by the Goods and Services Tax Board last year to repay loans aimed at compensating countries for the five-year period since July. The introduction of the year 2017 and not for any extension of compensation to countries after June 2022.
The Goods and Services Tax (GST) was a good idea but poorly implemented. Micro-level management does not occur in implementation. Because of that, the countries are in a very bad position. Delhi Finance Minister Manish Sisodia told the Indian Express that the extension of the compensation scheme should happen.
“The Center is not required to pay out of its resources. The compensation money was supposed to come from income tax. For the effective implementation of the GST, in the way it was envisioned, the compensation system must continue. The states relinquished most of their tax rights, and the value tax was The additive is one of the biggest ingredients for it.14 per cent growth has been promised, which has not been achieved and is coming to an end. “That hasn’t happened,” he added.
The council is also expected to discuss the ministerial committee’s interim recommendations on price rationalization including imposing a 12 per cent tax on hotel rooms costing less than 1,000 rupees per day that are currently exempt, and increasing the rate of manufacturing services for leather goods and mud bricks from 5 per cent to 12 He raised the GST on LED lights, ink, knives, blades, powered pumps, spoons, forks and dairy machines from 12 percent to 18 percent, and brought in prepackaged food items including rice, atta, curd Lassi, puffed rice is on a par with branded food items with a tax rate of 5 percent. In addition, the proposal of the Commission to prepare for the imposition of a tax on margins given by the tour operators at a favorable rate will be discussed along with a proposal to make the electronic route bill mandatory for the movement of gold within the country above the threshold of Rs 2 lakh.
More measures to comply with bridging revenue leakage in the near future with more scrutiny to be more high-risk taxpayers. At the time of registration, measures such as better validation through the use of mandatory biometric authentication for high-risk taxpayers, inclusion of electricity bill data, real-time validation of all bank accounts against a certain PAN and geo-tagging by the Ministerial was proposed. Team.
“Base expansion is the only option, you can’t raise interest rates. Compliance must be increased by using technology to identify revenue leakage, false revenue, which is not caught in the system at the moment,” said Sisodia, who was a member of the Moroccan government on system reforms.
Identify risky behavior of new registrants/applicants using AI and put information in the back office of the field officer to perform mandatory physical verification of these taxpayers along with real-time bank account validation through GST system integration with NPCI and insertion of electricity bill metadata ( CA number) as a data field during registration by new taxpayers are some of the actions that will be discussed at the board meeting.
From 2021 to 2222, only five of the 31 states/UTs – Arunachal Pradesh, Manipur, Mizoram, Nagaland and Sikkim – recorded revenue growth above the GST protected revenue rate for states. Puducherry, Punjab, Uttarakhand, Himachal Pradesh and Chhattisgarh recorded the highest revenue gap between protected revenue and total GST revenue after settlement in 2021-22.