GST Council Meeting in Jaisalmer Takes Key Decisions to Support Small-Scale Sector and Improve Tax Accuracy

The 55th Goods and Services Tax (GST) Council meeting took place in Jaisalmer, Rajasthan. Key decisions were made to aid small businesses and prevent market monopolies, as stated by the Kerala Finance Minister's office. Measures were also introduced to enhance the business sector, marking a significant step forward.

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Kerala has long advocated for precise Integrated Goods and Services Tax (IGST) settlements. A major decision was to require online service bills to specify the state where services are provided. This aims to ensure accurate tax distribution, as many inter-state transactions currently lack proper documentation of service locations.

Focus on Accurate Tax Distribution

The GST Council addressed the issue of unregistered individuals renting buildings to businesses. Previously, tenants had to pay GST on rent under the reverse charge mechanism, burdening traders under the composition scheme who couldn't claim input tax credit. The Council decided to exempt these traders from such tax liabilities.

Additionally, Kerala's demand for accurate IGST settlement led to the formation of a committee. This group will examine various IGST aspects and provide recommendations for improving settlement accuracy. These efforts aim to strengthen state treasuries by ensuring precise tax allocations.

Addressing State Concerns

The Council also discussed taxes on hotel food with premium room rents, specific cancer treatment medicines, and late fees on GST returns. Kerala opposed including aviation turbine fuel in the GST framework, fearing it would weaken states' taxing powers post-GST implementation.

After the 2018 floods, Kerala was allowed to collect a flood cess. Andhra Pradesh has now requested similar permission from the Council. Kerala supported this request and advocated for state governments to have more autonomy in resource mobilisation due to their understanding of local issues.

The meeting highlighted Kerala's ongoing efforts to ensure IGST accuracy and fair tax distribution. These initiatives are expected to bolster state finances and support small businesses by addressing key taxation challenges.