GST COUNCIL

TAG: GS: 2- POLITY AND GOVERNANCE

CONTEXT: The 54th GST Council Meeting, held on August 12, 2023, made significant recommendations aimed at improving the Goods and Services Tax (GST) framework in India.

EXPLANATION:

What is GST Council:

Article 279A establishes it through the 101st Constitutional Amendment Act of 2016. its Chairperson of The Union Finance Minister. In the Members Union Minister of State for Finance (Revenue), State Finance Ministers or any other nominated ministers from the states.

• It plays a crucial role in ensuring “cooperative federalism” by maintaining consensus between the center and the states in taxation matters.
• Helps in resolving disputes between states or between the center and states on GST issues.

Functions of the GST Council:

• Recommend GST rates, exemptions, and threshold limits.
• Make recommendations on model GST laws and principles of levy.
• Propose special rates for raising additional resources during natural calamities or disasters.
• Ensure a uniform GST structure across the country, promoting ease of doing business.
• Finalizing laws related to ‘input tax credits.
• Addressing issues related to GST compensation to states.

Key Recommendations of the GST Council

• Reduction in GST Rates:
  • Uncooked/unfried snack pellets: The GST rate was reduced from 18% to 5% to benefit the food processing industry and make essential goods more affordable.
  • Millet-based products: Exemption from GST if sold in pre-packaged and labelled form. This aligns with the government’s focus on promoting millets, especially given the declaration of 2023 as the International Year of Millets by the United Nations.
• Tax on Online Gaming, Casinos, and Horse Racing:
  • A uniform 28% GST was imposed on the full value of online gaming, horse racing, and casinos. This was implemented as part of regulating the online gaming industry and addressing concerns over gambling and revenue leakage.
• Exemptions and Clarifications:
  • Clarification on GST on renting of residential properties for personal use – no GST will apply unless the property is rented by a registered person under GST.
  • Clarified GST exemptions on satellite launch services provided by ISRO, Antrix, and NSIL to foreign customers. This promotes India’s space sector and makes Indian satellite launch services globally competitive.
• Simplification of Compliance:
  • Simplification of GST rules and processes to improve compliance and reduce litigation.
  • Measures for easing the compliance burden, especially for MSMEs and startups, aligning with the government’s push towards a more business-friendly environment.
  • Proposals to ease compliance requirements, especially benefiting MSMEs and startups.
• Compensation for States:
  • Deliberation on the GST compensation cuss issue. Many states have raised concerns about revenue shortfalls post the compensation period (ended in June 2022). This remains a significant point of discussion.
• Satellite Launch Services:
  • GST exemption for services provided by ISRO, Antrix, and NSIL to foreign customers, boosting India’s space industry.
  • The GST Council is essential for maintaining a ‘harmonized taxation system’ in India, ensuring fairness and uniformity in GST implementation across the country.

Source:

https://pib.gov.in/PressReleasePage.aspx?PRID=2053233