GST Council Meet To Address Key Issues; Tax Cuts On Millet Mix and Molasses Expected

Goods and Services Tax (GST) Council will hold a meeting to discuss various proposals. These include extending the concessional tax rate of 18 per cent to vehicles purchased by visually impaired individuals, exempting millets sold in powdered form.

The discussions on 7 October, will also be centered around clarifying the levy of tax on bank and corporate guarantees provided by directors and promoters to a company and its subsidiaries, according to a report by ET.

Relief for the Liqour Industry

The fifty-second GST Council is expected to discuss a proposal to decrease the GST on molasses from 28 per cent to 5 per cent to provide clarity to the liquor industry.

Additionally, the council may clarify that the intention is not to tax Extra Neutral Alcohol (ENA), a high purity ethyl alcohol used as a primary raw material for making alcoholic beverages for human consumption.

Council's rejections

The fitment committee, which examines tax rates, has rejected over a dozen proposals by the industry and has not recommended any significant tweaks in rates. The committee comprises revenue officers from both the center and states.

The fitment committee rejected proposals to reduce the GST on lithium-ion batteries used in electric vehicles (EV) to 5 per cent from 18 per cent, reduce the compensation cess on cigarettes, and grant tax exemption to institutes imparting flying training.

Railways

The council is also expected to take up a proposal to bring all services provided by Indian railways under the forward charge mechanism, which is leading to an annual loss of Rs 1,300 crore due to the national transporter's inability to claim input tax credit.

More clarity for the taxpayee

The council will also consider a host of proposals to provide greater clarity to taxpayers under the GST regime. These include a recommendation by its law committee that a corporate guarantee given by directors or promoters to subsidiaries is a supply of service and the valuation for taxation can be either the remuneration in case of a director or one per cent of the total guarantee amount.

Changes for GST Appellate Tribunal

The meeting will consider another law committee recommendation to allow advocates with 15 years of practice eligible as judiciary members in the GST tribunal and increase the upper age limit of the chairman of appellate tribunals to 67 years from the current 63 years.

The council may provide some relief to the industry in the form of additional time to file appeals in tax disputes for specific cases.

'One Person, One Company'

Additionally, the council could consider changes in the GST registration forms to incorporate 'One Person One Company' and provide detailed clarification regarding the place of services in case of advertisement service, data center and co-location service, and services provided through mail and courier.

Other changes

The council is likely to discuss and review GST on various public contracts on government-related constructions that are not for sale, like bridges, roads, and industrial units.

Furthermore, the council is considering exempting GST on horticulture services given on contract to maintain public parks, lawns, and public gardens where the value of goods is less than 25 per cent.