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GST council meeting outcome awaited after FM's corporate tax break

All eyes are on the Goods and Services Tax (GST) council's meeting in Goa after the government slashed corporate taxes, aiming to reviving private investment and lifting growth from a six-year low that has caused job losses and fueled discontent in the countryside. Domestic companies will pay 22 per cent tax on their income from April 1, 2019, versus 30 per cent previously, Finance Minister Nirmala Sitharaman said Friday. The effective rate, including all additional levies, will be 25.2% and applicable on companies that aren't availing any incentives or exemptions. Sitharaman's announcements and the GST council's meeting comes at a time when India's annual economic growth fell to a 25-quarter low of 5% in April-June period. Here are live updates on the GST council meeting and reactions of the latest round of stimulus

Five things to expect from GST Council meet in Goa today

  • 1) The Council is expected to cut tax rates on hotels that charge room tariff of 7,500 or more per night and currently attract 28% GST
  • 2) Taxation of lottery tickets has been a contentious issue with two rates applying to this sector

By pankaj jaiswal

New Delhi: Federal indirect tax body, the Goods & Services Tax (GST) Council, is set to meet in Goa on Friday amid demands from the industry for a fiscal stimulus. Here are the five things to expect from the meeting to be chaired by union finance minister Nirmala Sitaraman.

1) Tax rate cut on luxury hotels

The Council is expected to cut tax rates on hotels that charge room tariff of 7,500 or more per night and currently attract 28% GST. With the government keen to promote tourism industry and help generate more jobs, a tax rate cut on luxury hotels is top on the agenda. Prime Minister Narendra Modi in his Independent Day speech too had suggested promoting tourism was on the government’s agenda. State finance ministers are in support of the move as a tax cut on luxury hotels is unlikely to impact overall GST receipts.

2) Tax cut on outdoor catering services

Many experts have suggested that while the GST council  has, in several rounds, reduced the tax burden on products, the same has not happened in the case of services. The Council will consider a rate cut on outdoor catering services which employs semi-skilled or unskilled labour..

GST collection shortfall for the first five years of GST. States’ demand will be discussed at the Council but a final call may take further deliberation.

3) Single rate for lottery tickets

Taxation of lottery tickets has been a contentious issue with two rates applying to this sector—12% on lotteries sold within the organising state and 28% on those sold outside. This, industry representatives say, has hit sales. The huge difference in the tax rate on the same commodity acts as a tariff barrier for smaller states such as Goa, Sikkim and Arunachal when their tickets are sold in other bigger states, including West Bengal or Kerala, they say.

4) Compliance relief for small businesses

The Council is expected to consider proposals for giving compliance relief to small businesses by exempting them from filing annual returns for the first two years of GST–FY18 and FY19.

5) Discussion on extension of GST cess

With the economic slowdown affecting GST revenue collection, states have suggested that the central government borrow from the market and compensate them for their revenue loss and extend the GST cess on select products like automobiles and tobacco beyond 2022. The proceeds from the cess are used for making good states’ GST collection shortfall for the first five years of GST. States’ demand will be discussed at the Council but a final call may take further deliberation.