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2-min read

GST Council Sets Up Committee to Decide on Sugar Cess, Easy Returns Get Nod

“Sugarcane farmers are in deep distress. A separate group of 5 ministers within 2 weeks will make a recommendation to meet contingency of this kind when the cost of a commodity is higher than its selling price. Committee will be announced within next 2 days", said Arun Jaitley.

Rounak Kumar Gunjan | News18.com@Rounak_T

Updated:May 4, 2018, 6:33 PM IST
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GST Council Sets Up Committee to Decide on Sugar Cess, Easy Returns Get Nod
New Delhi: Finance Minister Arun Jaitley chairs the 27th GST Council meeting through video conferencing in New Delhi on Friday. PTI Photo (PTI5_4_2018_000112B)
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New Delhi: The Goods and Services Tax (GST) Council in its 27th meeting on Friday signed off on setting up a committee comprising five state finance ministers to decide on sugar cess.

“Sugarcane farmers are in deep distress. A separate group of 5 ministers within 2 weeks will make a recommendation to meet contingency of this kind when the cost of a commodity is higher than its selling price. Committee will be announced within next 2 days", said finance minister Arun Jaitley after the meeting on Friday.

Currently, the government levies GST compensation cess to recompense states that may incur losses in the first five years of GST implementation.

This gains significance after the Cabinet meeting on Wednesday approved financial assistance at the rate of Rs 5.50 per quintal of cane crushed in sugar season 2017-18 to sugar mills to offset the cost of cane and in order to help sugar mills to clear cane dues of farmers.

The council also affirmed of easier returns which will come into effect six months later.

The Sushil Modi-led group of ministers (GoM) put forward three models of a new form for discussions before the council. One of the models of new return form stipulates that provisional credit should not be granted unless the taxpayers file returns and pay taxes.

The second model provides that provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed.

After consulting the stakeholders, the GoM earlier this month worked out a third model for return filing as per which credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN portal.

Attended by all state finance ministers, the council also gave in-principle approval for buying out remaining 49 percent stake in the GST network (GSTN).

"Second important item discussed was change in ownership structure of GSTN, the original structure of GSTN, 49 percent held by the government and balance 51 percent by other entities. I had made a suggestion that this shareholding of 51 percent should be taken over by the government and divided equally between states and Centre," said Jaitley

Currently, five private financial institutions, HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd, hold 51 percent stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime.

"Eventually, central government should hold 50% and state governments will hold 50% collectively. The collective share of state governments will be pro-rata divided among the states as per their GST ratios," added Jaitley

The Union Finance Minister Arun Jaitley-chaired council, met through video conferencing.

GST Council referred decision to incentivise digital transactions to the GoM which will be taken up in the next meeting.

Certain state ministers were however not too welcoming of decision. Kerala finance minister said, "Decision to impose a commodity specific cess wrong. Today some states are asking for a sugar cess, then why deny us a rubber cess?"

West Bengal Finance Minister said, "Sugar cess would have led to distortion; many states expressed concerns about the cess, only 5 states would have benefited." The meeting comes at a time when Goods and Services Tax (GST) collections achieved its record high by exceeding Rs 1 lakh crore milestone in April.
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