Tuesday (September 17): Owing to the dull tax collections this fiscal year, GST panel is not likely to support any cut in tax rates in the autos sector, or even consumer goods.
According to the government study, attached to the agenda of a Sept. 20 GST panel meeting, the total annual revenue loss could be as much as 500 billion rupees ($6.95 billion), if the panel decided to lower tax rates for the auto sector to 18% from 28%.
The auto sector, which has been reeling from the worst slump in nearly two decades, has pushed for a lowering of tax rates at the Sept. 20 GST panel meeting, in a bid to revive vehicle demand.
“I will oppose any reduction for the simple reason that it won’t be revenue neutral,” said Thomas Isaac, finance minister of the southern state of Kerala.
In the April-July period, total tax revenues of 20 Indian states fell 7% to 4.9 trillion rupees compared with the same period last year. Some states were particularly hard hit, with data showing Andhra Pradesh, Rajasthan and Punjab tax collections plunged 59%, 35.5% and 12.5%, respectively.
The GST panel is consisted of the union finance minister and finance ministers of all states as its members. All decisions are taken by vote.
In the last few days, a slew of measures have been announced by Union Finance Minister Nirmala Sitharaman, in a bid to revive the stalled economy. The Indian economy is witnessing lowest GDP growth of 5% in over last six years.
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