NEW DELHI: The 54th meeting of the Goods and Services Tax (GST) Council here on Monday will have a heavy agenda, including an introductory discussion among the Union finance minister and the state finance ministers on how to go forward on the much-awaited plan to revamp the tax’s slab structure, according to official sources.
The Council may also review the exemption granted to payment aggregator platforms for transactions below Rs 2,000 through UPI, debit/credit cards and other payment methods. Sources said the payment aggregators will likely remain exempt from GST on payments via UPI and internet transactions, but transactions below Rs 2,000 on such platforms by other means like debt and credit cards could be brought under the tax net with an 18% levy on the service charge.
While some relief is most likely for taxpayers in the form of a reduction in the tax incidence in the GST on health insurance policies, the exact nature of this would be decided by the council after deliberations. Currently, GST is levied at 18% on the gross premium amount.
Besides, sources added the Council would likely bring the curtain down on the hefty tax notices issued to IT major Infosys and others by clarifying that the funds remitted by Indian firms to their foreign branch offices for operational purposes would not be subjected to GST under the reverse charge mechanism. This follows a clarification by the Central Board of Indirect Taxes and Customs via a circular in June 26 that in cases where the domestic entity hasn’t issued an invoice to the related foreign entity, the value of the “services” purported to be rendered by it (and hence that of GST) could be deemed to be nil.
Further, a status report on 28% GST on the online gaming will also be presented to the Council. After the 28% rate was enforced on the sector from October 2023, it was to be reviewed after six months.
Among the several other proposals before the council is waiver of 18% tax on research grants received by education institutions.
While a committee of officers will present the status of the current GST rates and the revenue trends after the GST’s July 2017 roll-out, the recently re-constituted Group of Ministers on rates restructuring, headed by Bihar deputy chief minister Samrat Choudhary, would make a detailed presentation on the work done so far, and commit to the time-line for completing its mandate.
On July 30, the Directorate General of GST Intelligence (DGGI) issued a Rs 32,403-crore ‘pre-show-cause’ notice to Infosys, stating that the company has not paid GST under the ‘reverse-charge mechanism’ (RCM) on import of services, received from its overseas branches, for the period between July 2017 and 2021-22. However, it later withdrew the notices, amounting to Rs 3,989 crore for 2017-18, after the IT major submitted its documents of the transactions made during that period.
On health insurance and health reinsurance, which generates close to Rs 10,000 crore in GST revenues to states and the Centre, a middle path would be found to bring down the tax rate from 18% as many states are not in favour of exemption due to huge revenue losses.
“There is broad agreement that GST rate on health insurance will be reduced with conditions and stipulations…states are reluctant to lose revenues,” the official said. The department of financial services had written to the Council for reduction of GST rate on health insurance.
“Where research grants are provided without any underlying service commitment, only to encourage R&D activity in a sector or in respect of a specific problem, there should not be any questions on the GST applicability as it would be tantamount to a transaction in money bereft of any corresponding services,” said MS Mani, Partner, Deloitte India.
Source: The Financial Express
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