New Delhi: Union Minister for Finance & Corporate Affairs Nirmala Sitharaman on Saturday is currently chairing the 39th GST Council meeting in New Delhi. Minister of State for Finance Anurag Thakur is also present in the meeting.
Goods and Services Tax(GST) rates on mobile phones, fertilisers, man-made fabrics and garments are likely to be hiked to 18 per cent in the GST Council meeting.
Experts said the rate hike would improve the working capital position of the manufactures as it would correct the inverted duty structure but may lead to an increase in the price of the finished goods.
Currently, under the goods and services tax (GST), certain manufactured goods attract a tax rate of 5 per cent or 12 per cent while their inputs, input services and capital goods attract GST at the higher rate of 18 per cent or 28 per cent. The manufacturers have to claim a refund of accumulated input tax credit (ITC) where the tax rate on input is higher than the finished goods.
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According to sources, the refund claimed on account of inverted rate structure is about Rs 20,000 crore per year and there is a need to correct this anomaly.
Significant items in inverted rate structure are fertilisers, mobiles, footwears, man-made yarns and fabrics, renewable energy devices, and tractors. A number of other smaller items like utensils also attract inverted duty structure.
"The GST Council will take up in phases the correction of inverted duty on items as per the recommendation of the officers' committee. On Saturday, 4 items mobiles, fertiliser, footwear and man-made fibre, fabric and garments would come up for correction," the official said.
(Inputs from Agencies)
