Ahead of the meeting of the GST Council, Congress-ruled Punjab has demanded a cut in tax rate on life-saving items for Covid-19 treatment as well as implementation of pending reforms, including reviewing tax rates and exemptions, setting up of dispute resolution body and ways to bridge shortfall facing states.
In a letter to Finance Minister Nirmala Sitharaman, who heads the GST Council that also comprises representatives of all states and union territories, Punjab Finance Minister Manpreeet Singh Badal sought a discussion on floor and band of rates within which states may be allowed to fix their respective State-GST rates as they continue to face deficit of around 20 per cent of the assured revenue.
In the six-page letter dated May 24, he also raised the issue of bureaucrats being allowed to tweak GST rules in the name of enforcement without the political oversight of the GST Council, which sets a “dangerous” precedent.
The GST Council is to meet for the first time in nearly eight months on Friday (May 28).
Badal said many goods, including protective garments, digital thermometer, laboratory sanitisers/disinfectants and paper bed sheets, which are needed to fight the pandemic, attract a basic customs duty of 20 per cent and a Goods and Services Tax (GST) of up to 18 per cent.
On top of that, a 10 per cent social welfare surcharge is levied on such items.
“As IGST is charged on taxable value, that includes import duties, the effective burden exceeds by another 2-3 per cent, Badal said.
“It is baffling that despite the crisis our country currently finds itself in... Taxes this high continue to apply on basic essentials needed to overcome this life-threatening disease...,” Badal wrote. He also suggested review and harmonisation of tax rates and exemptions to eliminate evasion and simplify tax credit chain.