The rate fitment committee, which comprises tax officials of the central and state governments, is tasked with evolving a principle and a subsequent methodology to determine rates for various supplies under GST
The GST rate fitment committee gathered for the third consecutive day on Saturday to finalise the rate slab for commodities and services for final approval at the 14th GST Council meeting in Srinagar to be held on May 18 and 19. A source privy to the deliberation at the meeting said that it wasn’t clear if the committee will be able to finalise the rates at the end of current round of meeting.
“We are trying to meet the May 18 deadline given to us by GST Council, but at beginning of the third day, it’s hard to say if the exercise will be completed this week,” the official told FE. He added that committee will meet again if the necessary. The rate fitment committee, which comprises tax officials of the central and state governments, is tasked with evolving a principle and a subsequent methodology to determine rates for various supplies under GST.
As FE had reported last month, sources say that even after the GST Council approves the rates later this month, the rates will be notified and made public only closer to the July 1 rollout to avoid market distortion and hoarding. Experts said that the reason for delaying announcement of rates could be to negate the possibility that a manufacturer may ramp up or slow down production till July 1 if it’s known that a commodity will be taxed at a lower/ higher rate under GST.
As far the principle applied to rate fitment is concerned, the source reiterated that the GST rate for an item will be, to the extent possible, the one that is nearest to the current rate. It is expected that the council will take into account the real tax incidence at present rather than the nominal rate. For instance, if the nominal tax rate on an item with maximum retail price of Rs 150 and ex-factory price of Rs 100 is 26.5% (12.5% excise and 14% VAT), the real tax incidence on the price to the consumer could be just over 22%, as the excise duty is virtually levied on the ex-factory price, with abatement for post-manufacturing value addition.