GST Council meet continues; all eyes on outcome

In the GST Council meet in progress today, states have reportedly demanded extra compensation to alleviate demonetisation pain. The states also want Centre to raise compensation corpus from Rs 55,000 crore to Rs 90,000 crore. At the same time, new roadblocks have surfaced on taxation rights of goods transported through territorial waters.

Finance minister Arun Jaitley-headed GST Council continued its deliberations today on latest issues such as dual control on dividing assessing powers between the Centre and the states.

On the other hand, the recent ban on Rs 500 and Rs 1000 notes have impacted state governments’ revenue. So, all the states tried to drive a hard bargain on Tuesday’s GST meet demanding extra compensation to offset losses in their tax revenues. Since most of the products are moved through sea route, the coastal states demanded taxation rights over goods transported within 12 nautical miles of their respective geographical territories.

The GST Council has agreed on a four-slab structure, i.e. 5, 12, 18 and 28 per cent, along with a cess on luxury and `sin’ goods such as tobacco. A panel of bureaucrats (of the states and the Centre) was subsequently expected to classify the goods and services according to this slab structure. An agreement on the rate classification is critical to test the countrywide information technology backbone under GSTN.