Finance Minister Nirmala Sitharaman is chairing the 46th GST Council Meeting in New Delhi. The meeting is a precursor to the forthcoming annual Union Budget which will be presented on the first day of February in Parliament.
After several state governments pressed for a continuation of GST compensation keeping in mind the havoc caused by the COVID pandemic, it will be interesting to see the final decision of the GST Council. State governments of Chhattisgarh, Delhi, Kerala, and West Bengal, among others, want the compensation policy to continue for another five years to help recovery efforts.
The resurgence of the pandemic with a new variant will also be a major factor in influencing the decisions of the Council. With COVID cases rising at an alarming rate, most states have already issued soft measures and curfew restrictions. Delhi NCR already has a Yellow Alert in place as the daily cases cross 1,300 – the highest in seven months. Keeping in mind the possibility of another lockdown, the results of the GST Council meeting will be closely followed by stakeholders and the public alike.
The demand for the extension of GST compensation was made at a pre-budget meeting held on December 31, which was attended by the Finance Ministers of the States and Union Territories. During the course of the meeting, the Finance Minister listened to the inputs and the suggestions of the ministers for the upcoming Budget.
Several states including Delhi, Gujarat, Rajasthan, and Tamil Nadu, aired their concerns over the proposed hike on textile at the meeting. They vetoed the hike in Goods and Services Tax (GST) rate on textiles from 5 percent to 12 percent with effect from January 1, 2022.
A GST Council meeting in September had approved a GST hike from 5 to 12 percent on textile and footwear from January 1, 2022. This was done to correct the anomaly of an inverted duty structure. However, at the pre-budget meeting, several states flagged the proposed hike and demanded that it be kept on hold for now.
Consequently, the 46th GST Council Meeting will most probably revolve around the issue of the GST hike on textiles and footwear. The Finance Ministry took to Twitter to announce the meeting, which will be a physical meet. The tweet of the Ministry read, “FM Smt. @nsitharaman will chair the 46th meeting of the GST Council in New Delhi, tomorrow. The meeting will be attended by MoS for Finance Shri @mppchaudhary & Shri @DrBhagwatKarad, besides Finance Ministers of States & UTs and Senior officers from Union Government & States.”