On May 18, 2017, the first day of the 14th Goods and Services Tax (GST) Council Meeting was held in Srinagar, the summer capital of Jammu and Kashmir. The meeting was chaired by the Union Finance Minister, Arun Jaitley, and attended by finance ministers and officials from all states and union territories in India. The main agenda of the meeting was to finalize the rates of the remaining goods and services that are yet to be decided under the GST.
The GST is a comprehensive indirect tax on manufacture, sale, and consumption of goods and services throughout India, which will replace various indirect taxes levied by the central and state governments. It is expected to remove the complexities of the current tax system, enhance economic growth, and increase revenue collection for both the central and state governments.
The GST Council Meeting in Srinagar was significant, as it was the first time that the council met after the passage of the four GST bills by the Parliament. The council had previously met seven times, where most of the decisions regarding the GST were taken, such as the rates for the goods and services, the compensation formula for the states, and the administrative structure of the GST.
The council began its proceedings by observing a two-minute silence in memory of the 25 CRPF personnel who were killed in an attack by terrorists in Chhattisgarh a day earlier.
After the formalities, the council started discussing the rates for various goods and services, such as gold, packaged foods, footwear, textiles, and services like telecom and airlines. The council decided to put most of the essential goods, such as milk, cereals, and essential medicines, in the zero or the 5% tax bracket. On the other hand, luxury items such as gold, high-end cars, and aerated drinks were given a higher tax rate of 28%.
The GST Council also decided to keep the tax rate for most of the services at 18%, except for five services, which were given a rate of either 5% or 28%. The council also decided to keep the tax rate for the healthcare and education sectors at 12%, which was lower than the previously decided rate of 18%.
The council faced some opposition from the states for the high tax rate of 28% for the hotel industry, as it could adversely affect tourism. The council, however, decided to keep the rate as it is, but gave some relief to the small hotels with a tariff of less than INR 7,500 by lowering the tax rate to 18%.
The council also discussed the compensation mechanism for the states that would suffer revenue losses due to the implementation of the GST. The council decided that the central government would compensate the states for the first five years, and the compensation amount would be calculated based on the growth rate of the GST revenue of the states.
The GST Council Meeting in Srinagar was significant in many ways, as it finalized most of the rates for the goods and services under the GST. The council also showed the spirit of cooperation among the states and the central government in implementing the GST, which is expected to bring the much-needed reform in the Indian tax system.
The 14th Goods and Services Tax (GST) Council Meeting was held on May 18, 2017, in Srinagar. The council finalized the rates for the remaining goods and services under the GST and showed the spirit of cooperation among the states and the central government in implementing the GST.BusinessTaxation
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