New Delhi: Amid the clamour for a rate cut by various industries, the all-powerful GST Council will hold a crucial meeting on Friday to decide on tax moderation, keeping in mind the revenue position and the need to boost sagging economic growth.
The GST Council, headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and Union Territories (UTs), will have its 37th meeting in Goa in the backdrop of economic growth hitting a six-year low of 5 per cent for the first quarter of the current fiscal.
There have been demands pouring in from various sectors - from biscuits to automobiles and FMCG to hotels - to reduce tax rates in the wake of an economic slowdown.
| Sectors | Present GST Rate | Demand |
| Automobile Industry | 28 per cent | 18 per cent |
| Telecom Services | 18 per cent | 12 per cent |
| Hotel industry (Tariff 7,500 and more) | 28 per cent | 18 per cent |
| Biscuit Industry (low cost) | 18 per cent | 5 per cent |
| Biscuit Industry (premium) | 18 per cent | 12 per cent |
The argument propagated has been to boost the consumption and domestic demand by reducing Goods and Services Tax (GST) rates further.
However, many of the states are of the view that it would not be tax prudent to allow GST rate reduction at this stage, as the compensation cess fund, which is utilised to compensate the states under the GST Act in case the revenue is below the targeted growth rate, has turned negative.
Meanwhile, according to sources, the GST Council's Fitment Committee, which comprises revenue officials of both Centre and States, has rejected demands for a cut in the tax rate on items ranging from biscuits to car, owing to tight revenue position.
The GST Council may consider introduction of a special composition scheme for taxpayers supplying brick kilns, sand mining activities and stone crushers with an increased rate, sources said.