GST Council Meeting| Kerala To Reject Two Alternatives Presented By Centre


Kerala has stuck to its previous stance to reject the alternatives presented for paying compensation to states on account of the Goods and Service tax. The union finance minister Nirmala Sitharaman will behead the 42nd meeting. The center has claimed the support of more than 20 states for their proposal to meet the expected GST revenue. The finance ministry estimated a 2.35-lakh crore shortfall in cess collection as 3-lakh crore is due this year. Due to the coronavirus pandemic and lockdowns, economic stress is arising.

Total ten opposition ruled states, including Kerala are not agree to the proposals, which envision states collecting 97 thousand crores. Kerala finance minister T.M. Thomas said that there is no fork of revenue shortfall because of a pandemic.

The total shortfall needs to be compensated as per the state’s policy, and it can’t be linked to regular and additional borrowing. Kerala is the first state to speak out against the centers proposals and refuse the GST proposal. The government will be willing to discuss with the finance ministry to extend the compensation of five years.

GST Council Meeting To Review The Economic Condition

If there is no consensus in the GST Council on negotiations, Dr Isaac said the official supplies of the clash resolution mechanism within the council should be implemented without delay. The long-standing requirement of the United States to appoint a Deputy Chairperson to the GST Council should be considered and implemented firmly. In the first two years of GST implementation, the CAG’s audit report on the collection of obliged parking returns in the Indian United Fund is also likely to be elevated by other opposition-held countries.

Kerala finance ministry said that the central government’s approach had pushed the economy to the brink of disaster. There is significant destruction of trust that indicates a situation in which the actions of the Institute undermine the country’s resources and financial independence. In a review of economic performance in September, the Treasury said the Institute continued to provide ongoing support to the State government in speedy economic recovery.

The Key Points Discussed In The Council Meeting

  • GST Council recommends a 12% reduction in 1,500 cc diesel engine, 1,200 cc petrol vehicles capable of carrying up 13 people.
  • The Home Insurance schemes under the Department of Home Affairs will be released from GST.
  • The GST level in caffeinated drinks was increased from 18% to 28%, with a compensation benefit of 12%.
  • 12% GST rate to be charged on polypropylene bags and bags used for packaging GST is exempt from specified defences not made in India
  • The value paid for gemstones not cut and polished has dropped from 3% to 0.25%.
  • Jewellery deliveries are now attracting zero GST.
  • GST in the fishery was released from July 2017 to September 30 this year. There has been some uncertainty about their GST spread, and no tax has been collected, so it has been resolved.
  • Hot drink makers will no longer be under the GST plan.
  • The GST level rose in the train car, with trainers from 5% to 12%.
  • Measuring discount in hotel lodging services.

GST Rates As Per Daily Transaction Values

  1. 0-1000- no GST
  2. 1001- 7500- 12%
  3. above 7501- 18%
  4. services related to diamond is reduced by 1.5% from 5%
  5. for the engineering industry, GST down from 5% to 1.5%

The Shortfall

The compensation to states can’t be doled out from the consolidated fund of the country. The economy’s performance is continuously decreasing compared to the previous year, and the reason behind the downfall is the low revenue collection in the pandemic period. The opposition ruled state foot down as the option of borrowing 97000 crores from the states.

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