Rationalisation of rates on sanitary pads, handicraft may star in meeting

The 28th meeting of the Goods and Services Tax Council will likely discuss the inclusion of natural gas in GST, the rationalisation of tax rates on more items, including sanitary pads and handicraft items, and the simplifying of the returns filing procedure, according to tax analysts.

Last month, GST Council Joint Secretary Dheeraj Rastogi said the Council would most likely take up the inclusion of natural gas in its meeting since petrol and diesel are considerably larger sources of revenue for the Centre and States and hence they would be reluctant to bring those under GST.

“The meeting is expected to rationalise some product rates, introduce a modular return, and focus on additional tax-base expansion measures,” M.S. Mani, partner, Deloitte India, said. “It is also expected that the GST revenues including IGST allocations would come up for discussion.”

“While the Council has decided to defer Reverse Charge Mechansim and TDS/TCS, an update [from the last meeting] on the form and manner of further simplification of GST returns is awaited,” Archit Gupta, founder and CEO, ClearTax, wrote in a note.

The modular returns are expected to be such that a tax filer fills only the portion of the form relevant to them, and not the entire form.

Reduction of tax rates

Tax analysts said there have been powerful lobbies approaching the government to reduce the tax rates on construction material such as paints, cement, and marble.

“The rate rationalisation committee has been discussing several products, a few specific products where a lot of lobbying has been going on, such as paints and cement, and marble, where they want the rate to be reduced from 28% to 18%,” a tax analyst said requesting anonymity.

“Some States have also been lobbying for tax exemptions for handicraft, handloom and jute products.”

The Ministry of Women and Child Development has reportedly requested the Council to reconsider its earlier position and reduce the tax rate on sanitary pads from 12% to 5%.

The Centre had earlier argued that reducing the tax rate on sanitary pads would result in an inverted duty structure, where the inputs have a higher tax rate than the final product. However, a leading manufacturer had refuted the argument.

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