(PTI)
The GST Council will meet on Wednesday to review the taxation structure for shoring up the revenue as lower-than-expected collections has led to a delay in compensation payment to states. Some of the states such as West Bengal have opposed any hike in cess rates or rate calibration amid a slowdown in the economy, stating that consumers as well as the industry are passing through a distressing time. With the revenue shortfall looming large, there have been suggestions for raising GST rate and cess to meet the gap.
The GST Council headed by Finance Minister Nirmala Sitharaman had sought suggestions from states on review of GST and compensation cess rates on various items, rate calibrations for addressing the inverted duty structure, compliance measures other than those currently under implementation to augment revenue. In a letter to Sitharaman, West Bengal Finance Minister Amit Mitra said states have received letter from the GST Council wherein suggestions have been sought on review of items currently under exemption for shoring up GST revenues.
“This is indeed alarming. We should not in any way tinker with the rate structure or impose any new cess at a time when the industry and consumers are going through the most distressing times with ‘stagflation’ knocking at our door (stagnation accompanied by growing inflation),” Mitra said. Many economists, including former RBI Governor Raghuram Rajan, have expressed fear of India getting into a slow growth high inflation or stagflation mode. Rising food prices pushed retail inflation in November to an over three-year high of 5.54 per cent, while industrial sector output shrank for the third month in a row by 3.8 per cent in October, indicating deepening slowdown in the economy.
