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Updated on :  

08 min read.

The 46th GST Council meeting was held on Friday, 31st December 2021, at Vigyan Bhavan in New Delhi. It was chaired by the Union Finance Minister Smt. Nirmala Sitaraman. The meeting was also attended by the Union Ministers of State for Finance Shri Pankaj Chowdhary & Dr Bhagwat Kishanrao Karad, besides the finance ministers of the states and Union Territories (UTs) and other senior officers.

Highlights of 46th GST Council

Key matters discussed in the Council meeting, as announced in the FM’s press briefing:

The Union Finance Minister (FM), during the press meet, stated that the 46th GST Council meeting was called under the emergency provisions with just two days notice. She also clarified that it was a very brief meeting with the GST hike on textiles as the only item on the agenda.

The FM also said that the Gujarat FM had written a letter on 29th December 2021 requesting to reconsider the 45th GST Council meeting’s  decision to correct inversion in the tax structure of the textiles sector.

Hence, the Council decided to keep the GST hike on textiles from 5% to 12% on hold. Also, the Council informed the Group of Ministers (GoM) to include the GST rate on textiles in their study and submit the report by February 2022.

The FM clarified that the GST hike on footwear was not on the Council’s agenda, and no discussion happened in this regard. Hence, the new GST rate of 12% will apply to footwear from 1st January 2022.

The FM clarified that the next GST Council meeting will be held at the end of February 2022 or early March 2022.

Live Updates on 46th GST Council meeting

3:25 p.m. – Union FM addresses the media. The meeting was called under the emergency provisions. It was a brief meeting. A letter was written by Gujarat FM on 29th December 2021. Reconsideration of the decision made in the previous meeting for correcting inversion in the tax structure.

The GST hike from 5% to 12% is put on hold/status quo for only textiles and not footwear. The GoM on rate rationalisation will review the GST on textiles and will submit a report by February 2022. A GST Council meeting will be called by the end of February or early March 2022.

2 p.m. – Sources: GST Council meeting concludes; The tenure of GoM for rate rationalisation to further extend.

12:56 p.m. – Sources: GST Council has unanimously decided to postpone the increase in GST from 5% to 12% on textiles and footwear to a later date. The next GST Council meet will again pick up this matter to lay down a future roadmap.

12:25 p.m. – Sources: TN FM proposes Council to levy 12% GST on textile garments valued Rs.3,000-Rs.5,000 per unit and continue GST of 5% for garments valued below Rs.3,000 per unit.

12:10 p.m. – The GST Council meeting is underway and may tentatively end at around 3 p.m. The Union FM Nirmala Sitharaman will address the press around the same time.

11:30 a.m. – Sources: Many e-commerce operators into restaurant supplies have requested the GST Council to defer the 5% GST levy under Section 9(5) of the CGST Act.

11:10 a.m. – 46th GST Council meeting begins. Union FM, MoS for Finance attend the meeting.

46th GST Council meet, image courtesy : FinMin
Image Courtesy: FinMin

Expectations from the 46th GST Council meeting 

In the 45th Council meeting , the Union Finance Minister announced that they formed a Group of Ministries (GoM) to look into the rate rationalisation of certain goods and services. The Fitment Committee has also proposed several recommendations to the GoM regarding slab and rate changes. The committee, which includes tax officers from states and the Centre, has also recommended taking a few items from the exemptions list. 

From the inception, GST is a four-tier slab structure in which products are taxed 5%, 12%, 18% and 28%. All the essential products are either exempted or taxed at 5%, while demerit or luxury items attract the highest slab of 28%. Few luxury products and demerit goods will also attract an additional cess. 

However, it seems the GoM needs more time to have a final discussion on possible rate hikes and the merger of slabs. Hence, the Council is most likely to extend the GoM tenure by 2-3 months. Keeping all this aside, the GST Council may also roll back the GST hike on textiles and footwear.

The states are demanding the Centre to extend the GST Compensation cess for a period beyond June 2022.

Apart from these, the Council formed another GoM to look into e-way bills, compliances, FASTags, use of technology, compensation cess, plugging of loopholes, and other issues. The Council might take few decisions in procedural aspects if this GoM submits its report.

The GST Council will discuss augmenting revenues by merging the 12% and 18% slabs and taking out a few products from the exempt category. Also, the Council might continue correcting inverted duty structures for certain goods to reduce the procedural burden of refunds.

This meeting will extend to the pre-budget meeting of the Union Finance Minister with state finance ministers on 30th December 2021.

47th GST Council meeting scheduled at Chandigarh for two days – the 28th and 29th of June 2022.