Fuel inclusion, rate revamp likely on today’s GST Council agenda

Key Issues Up for Discussion:

• Review of GST rates on online gaming companies

• Amnesty scheme for resolving GST disputes might be discussed

• GST Council may consider exemption for foreign shipping lines & airlines

• Pre-Budget discussions expected at the meeting

• Streamlining GST compliance for SMEs may be explored

Mumbai: The GST council, which will be meeting on June 22, is expected to discuss the inclusion of gas and petroleum products within the ambit of the Goods and Services Tax (GST) regime.

Talking to Bizz Buzz, Subhash Varshney, former Principal Chief Commissioner of GST and Central Excise, said: “GST Council is likely to take the matter relating to inclusion of gas and petroleum products under GST regime.”

The removal of GST from fertilisers is also on the agenda for the meeting. The Fitment Committee has already recommended scrapping the GST levy on fertilisers.

Another important thing which may be on GST council’s table for discussion is rate rationalisation, where rate of 12 per cent and 18 per cent may be merged into one which could perhaps be 15 per cent or so. Review of GST rates on online gaming companies may also be discussed in the meeting.

Even as the online gaming companies are hoping for a review of the 28 per cent GST on the sector, the Council is likely to take up a plethora of issues including an amnesty scheme to clear up litigations, exemption to foreign shipping lines and airlines as well as pre-Budget discussions.

However, the GST Council is unlikely to reduce the 28 per cent tax on online gaming on actionable claims but could provide certain clarifications around it.

A decision around rate rationalisation may also not be taken up at present and the Group of Ministers is yet to finalise its report on the issue.

Pratyush Chattopadhyay, an Indirect Tax Practitioner and Partner, Maxim Management Consulting LLP said, “Considering long-standing demand of the industry and after experiencing the complexity with regard to interpretation of statute towards applicability of GST rate, it is expected that the council will initiate effective steps about rationalisation of GST rate. In addition to that, GST rate on fertiliser is expected to be reduced.”

It is important that petroleum products, at least low impact petroleum products like natural gas should be brought into the GST regime. Such step should reduce the inflationary pressure on the economy. Seamless movement of Input Tax Credit (ITC) is the key towards success of GST. Due to various restrictive clauses, the benefit of ITC is not passed on to the buyer in many situations. ITC provisions should be amended to eliminate such blockage of credit. Considering the challenges faced by small and medium enterprises (SMEs) in adhering to GST mandates, it is expected that the Council will explore options to streamline compliance requirements, he said.

This is the first meeting of the GST Council since October 7, last year and expectations are that it will clarify the tax position on several issues. A major issue around the amnesty scheme for GST could also be taken up when the Council meets and the rate of pre deposit of the tax could be lowered to 7.5 per cent.

The Council is also likely to clarify the GST treatment on foreign airlines and shipping lines, an issue due to which many of them have received tax notices from the Directorate General of GST Intelligence (DGGI). The DGGI has been of the view that several services are imported from the parent office by the local entity on which GST has not been paid.