Punjab Seeks GST Compensation to Offset Revenue Loss
By Rediff Money Desk, Chandigarh Sep 11, 2024 22:19
Punjab Finance Minister Harpal Singh Cheema has sought GST compensation to offset revenue losses in the state, highlighting the impact of GST on Punjab's economy. He also advocated for exempting research grants from GST and reducing GST on health insurance premiums.
Chandigarh, Sep 11 (PTI) Punjab Finance Minister Harpal Singh Cheema has sought goods and services tax (GST) compensation during the just-concluded GST Council's meeting, an official said on Wednesday.
In the 54th meeting of GST Council held in New Delhi on September 9, Cheema apprised the council that the state's effective taxation rate has significantly decreased since the implementation of GST.
Therefore, considering the low GST revenue, the council must look at ways to compensate states that are losing revenue due to the implementation of GST, said the official.
The official further said that the minister also advocated for exempting research grants from GST net, emphasising education as a top priority for the Punjab government, according to an official release.
Cheema also informed the council that as tax rates under the GST regime are no longer under state control, Punjab cannot offset losses resulting from change in the tax system.
Furthermore, since Punjab's industries manufacture goods that are consumed in other states, the state receives lower IGST (integrated GST) settlements.
Cheema also argued in favour of exempting research grants from GST levy.
The GST Council agreed to exempt research grants, including private grants to government institutions, research associations, universities, colleges, and other institutions notified under Section 35 of the Income Tax Act, said the official.
Punjab welcomed the GST Council's decisions to tax metal scrap on a reverse charge basis, along with TDS (tax deducted at source) at 2 per cent on B2B (business to business) transactions.
However, Cheema recommended re-examining the reverse charge mechanism (RCM) rate on metal scrap, proposing a reduction to 5 per cent.
The GST Council took note of the suggestion and assured appropriate action on the matter, said the official.
Cheema also advocated for reducing or exempting GST on premiums paid on health and term insurance, benefiting the common man.
Although no consensus was reached, the Council recommended a group of ministers (GoM) to submit a report by October.
Cheema also objected to recoveries from states due to a negative balance in the IGST ledger and recommended forming a committee of officers to assess the actual reasons for the negative balance.
Punjab volunteered for a pilot project on business-to-consumer e-invoicing to increase tax compliance.
The GST council also discussed the establishment of GST appellate tribunals, and Punjab is ready to set up the tribunal with the proposed location changed to Chandigarh and an additional bench in Jalandhar.
In the 54th meeting of GST Council held in New Delhi on September 9, Cheema apprised the council that the state's effective taxation rate has significantly decreased since the implementation of GST.
Therefore, considering the low GST revenue, the council must look at ways to compensate states that are losing revenue due to the implementation of GST, said the official.
The official further said that the minister also advocated for exempting research grants from GST net, emphasising education as a top priority for the Punjab government, according to an official release.
Cheema also informed the council that as tax rates under the GST regime are no longer under state control, Punjab cannot offset losses resulting from change in the tax system.
Furthermore, since Punjab's industries manufacture goods that are consumed in other states, the state receives lower IGST (integrated GST) settlements.
Cheema also argued in favour of exempting research grants from GST levy.
The GST Council agreed to exempt research grants, including private grants to government institutions, research associations, universities, colleges, and other institutions notified under Section 35 of the Income Tax Act, said the official.
Punjab welcomed the GST Council's decisions to tax metal scrap on a reverse charge basis, along with TDS (tax deducted at source) at 2 per cent on B2B (business to business) transactions.
However, Cheema recommended re-examining the reverse charge mechanism (RCM) rate on metal scrap, proposing a reduction to 5 per cent.
The GST Council took note of the suggestion and assured appropriate action on the matter, said the official.
Cheema also advocated for reducing or exempting GST on premiums paid on health and term insurance, benefiting the common man.
Although no consensus was reached, the Council recommended a group of ministers (GoM) to submit a report by October.
Cheema also objected to recoveries from states due to a negative balance in the IGST ledger and recommended forming a committee of officers to assess the actual reasons for the negative balance.
Punjab volunteered for a pilot project on business-to-consumer e-invoicing to increase tax compliance.
The GST council also discussed the establishment of GST appellate tribunals, and Punjab is ready to set up the tribunal with the proposed location changed to Chandigarh and an additional bench in Jalandhar.
Source: PTI
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