GST Council meet today: Nirmala Sitharaman faces her first test as Finance Minister


Nirmala Sitharaman will face her first test as India’s finance minister on Friday when she chairs the 35th meeting of the powerful federal indirect tax body, the GST Council, where soft skills of the union minister help build consensus.

Sitharaman’s predecessor Arun Jaitley had ensured all decisions of the Council were consensus-based without having to resort to voting.

To break the ice, Sitharaman will meet state finance ministers ahead of the meeting and seek their suggestions on the Union Budget for FY20. The GST Council meeting will take place later, in the afternoon.

The voting rights in Council are such that neither the union government, nor the state governments together, can take a decision without the consent of the other. Often, proposals have either been modified or separate caveats have been made for the likes of northeastern states, the economies of which are comparatively smaller.

In its 35th meeting, the GST Council is expected to discuss measures that will improve compliance by businesses and merchants and cut down tax evasion by the use of technology. It is also expected to discuss a few legislative measures as well as the implementation of the new goods and services tax (GST) return forms.

No big tax rate cut is planned.

Sitharaman last week met chief ministers of several states, including those of Tamil Nadu, Puducherry, and Rajasthan. The National Democratic Alliance (NDA) government has indicated that states will play an important role in policy making in New Delhi.

Prime Minister Narendra Modi last week convened a meeting of the governing council of federal think tank Niti Aayog to take on board the views of states regarding key policies his administration will take in the near term. Niti Aayog also announced setting up of a task force of chief ministers that will recommend a blueprint for resolving one of the pressing issues before the Modi government — rural distress.

Sitharaman had also invited suggestions from public on her maiden union budget in order to make it more broad-based. Her officers have been examining all suggestions made in the public domain, including social media, by various stake holders.

As part of the discussions on budget FY20, state ministers are expected to urge Sitharaman to consider issues of local importance such as setting up of higher education institutions, central support for dealing with natural disasters, higher import tariff protection to locally produced items and funds for infrastructure creation. Drought like situation in parts of the country is also expected to figure in the discussions.

At the GST Council, key legislative as well as tax rate-related decisions are first examined by a team of central and state officers. Where states have different views on matters, groups of state ministers sit down to resolve them with the assistance of officers before tabling them in the Council.

Friday’s meeting of the Council is its first after the recently concluded general elections.

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