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The 54th meeting of the GST Council saw significant progress in addressing pressing industry concerns and laying the groundwork for future policy reforms. The council's responsiveness to industry pain points is a testament to its commitment to fostering a conducive business environment in India. The meeting showcased the spirit of cooperative federalism, a crucial aspect of the GST's success, with both the central and state governments working collaboratively to find solutions.
Key highlights of the meeting include the rationalization of GST rates on various goods and services, regularization of past tax issues to avoid future litigations, and the formation of two GoMs to delve into critical topics. The GoM on life and health insurance will study the intricacies of this sector and propose solutions for streamlining the tax regime. The GoM on compensation cess, tasked with presenting its findings by October 24th, will explore the future of this mechanism, ensuring a sustainable and equitable distribution of revenue.
While the council's proactive approach to resolving immediate issues is commendable, the need for a long-term vision for GST is paramount. The council needs to address two critical areas to ensure the continued success and sustainability of the tax regime. First, a comprehensive re-evaluation of input tax credit (ITC) admissibility is required. This involves a thorough review of Section 17(5) of the GST law, which restricts credits in certain cases, and an analysis of sectors where credit restrictions have been imposed to keep rates low. This reassessment will help to ensure fairness and transparency in the ITC system.
Second, the council needs to streamline the audit process for large corporations. The current system, characterized by multiple organizations conducting audits and investigations, creates unnecessary burdens and potential inconsistencies. The council should establish a centralized coordinated audit system with possible rotation between the center and states. This would not only reduce the administrative burden on corporations but also enhance the efficiency and effectiveness of the audit process.
The GST Council's efforts to address industry concerns and its commitment to long-term vision are crucial steps towards creating a stable and predictable tax environment in India. The council's proactive approach, coupled with the findings of the GoMs, will contribute significantly to the overarching goal of ease of doing business in the country. The future of GST in India hinges on the council's ability to implement comprehensive and sustainable reforms, ensuring that the tax regime remains a key driver of economic growth.
Source: Sitharaman-led GST Council has a key task now to develop a long-term vision for tax