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States have been pressing for waiver of GST on critical items such as vaccines.
Amid a growing chorus over the GST Council meeting not being convened for over seven months, the Union Finance Ministry on Saturday announced that the next meeting of the panel that decides on taxes on goods and services will be held on May 28. After over a dozen central and state levies such as excise duty, service tax and VAT were subsumed in a nationwide Goods and Services Tax (GST) in 2017, the Council, headed by Union Finance Minister and including representatives of all states and union territories, was mandated to meet every quarter to deliberate on issues at hand.
The GST Council last met on October 5, 2020 to finalise contours of borrowings by states to meet shortfall in tax revenues. The meeting got extended and ended on October 12. Union Finance Minister Nirmala Sitharaman will chair the 43rd meeting of the GST Council on May 28, her office tweeted. “Smt @nsitharaman will chair the 43rd GST Council meeting via video conferencing at 11 AM in New Delhi on 28th May 2021. The meeting will be attended by MOS Shri @ianuragthakur besides Finance Ministers of States & UTs and Senior officers from Union Government & States,” it said.
Opposition party-ruled states have been complaining about not holding the GST Council meeting in recent weeks. West Bengal Finance Minister Amit Mitra earlier this week wrote to Sitharaman seeking urgent convening of the meeting to discuss the issue of compensation shortfall to states and other pending items. “You are kindly aware that the GST Council was mandated to meet once in every quarter. Unfortunately, this solemn mandate has been violated twice over, by not calling a meeting of the Council for two consecutive quarters – not even virtually.
“This has undermined a federal institution, where all states are represented irrespective of political parties, regions or size of population, along with the Government of India. I fear that not holding meetings regularly also lead to a trust deficit,” Mitra wrote. When GST was implemented, states were promised that they will be compensated for any shortfall in tax revenues arising out of their taxes being subsumed in a national GST, for the first five years. This was to be done by levy of a cess, on top of the GST rate, on certain luxury and sin goods.
However, the accumulations in the compensation kitty had been falling short of what the states were promised to be paid even before the pandemic broke out. And with the second wave of infections that have forced lockdowns in most states and UTs, the collections are way short. States have also been pressing for waiver of GST on critical items such as vaccines.
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