Quote on 56th GST Council Meeting by Mr. Ranjeet Mahtani, Partner at Dhruva Advisors
Below the Quote on 56th GST Council Meeting by Mr. Ranjeet Mahtani, Partner at Dhruva Advisors
* “The historic reboot of the GST law with the rate structure rejig and rationalization was pronounced yesterday. As always, the devil is in the details and the notifications are eagerly awaited, so as to have an implementation from 22nd September, 2025. Trade and industry will have their hands full; they will have to quickly identify changes in rates, reorient systems including IT systems with the new rates, revise costing and pricing, revisit contracts with vendors and customers, etcetera.
* Rate rationalization has been in the works for nearly two years and comes as a bonanza on the whole. However, there are several businesses, commodities, services that will face an increased GST rate, as per the proposals recommended by the GST Council.
* All in all, the rate rationalization and truly speaking rate structure rejig to keep GST true to the structure that was envisaged in 2016-2017, will boost consumption and benefit the common man. Some businesses will witness an enhanced rate while others will have to grapple with inverted duty structure owing to rate reduction for inward supplies or, unavailability of input tax credit due to an exemption kicking in, potentially impacting price to the customer.
* Yet another aspect that will need to be examined is what happens to the Compensation Cess in balance, upon it being discontinued. For example, motor vehicles at 40% were hitherto paying Compensation Cess and availing credit of Compensation Cess. Come 22nd September, it is unclear whether the balance of Compensation Cess can be utilized or, will have to be charged to business.
* The GST Council and Governments (Centre and State) have conveyed deep faith in the Indian businesses, that all rate cut benefit will be passed on to the customers/consumers. This is also because the Anti Profiteering provisions yielded lesser than Rs. 4500 crores from less than a 100 cases that were booked. Nonetheless, it will be interesting how the tax administrators will enforce and police such passing of rate cut when the statute prescribes that rate change benefit as also input tax credit benefit will be passed on to the recipient by way of commensurate reduction in price.”
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