In the next meeting of the GST council which is an apex body responsible for regulating and managing the GST related affairs, the GST council will cut down the GST compensation of states. In the meeting, the central government plans to inform the states that it no longer needs GST compensation revenue funds from the centre because of the solid GST revenue trend.
The centre is also planning to explain the steep rise in the curve of the GST revenue trend. GST revenue trend graph indicates the economical growth of states. High growth means states are flourishing with their GST collection, that they don’t need to depend on the centre to meet their demands. 20% growth in the GST revenue collections in April was much more than the projected anticipated growth of 14%. Also, large states with high populations and land areas recently got strong revenue collections. These states include Maharashtra, Rajasthan, Uttar Pradesh, Gujarat and Haryana.
According to the sources, some states still need to work on their state-budget related formalities, and once the states will complete it the ministry will convene the meeting of the GST council next month.
However, states are urging the centre to continue the GST compensation even beyond June 2022 to pay the debt raised in the last two financial years to meet the compensation fall. Also, states do not see any possibility of the centre increasing the GST compensation fund beyond June 2022.
The official data shows that the private final compensation expenditure has recovered and has reached the pre-covid levels in the financial year 2021-22. It grew at the rate of 16% this year indicating the boost in the tax consumption this year.
The department is also working on the GST applicability on cryptocurrency transactions that are neither goods nor services. During the recent budget for 2022, the government introduced a 30% tax on income from the transfer of virtual digital assets, including cryptocurrencies with no set-off for losses and no deduction for costs other than acquisition. Also, cryptocurrency trading is subjected to the deduction of 1% tax at the source.
However, there is not any proposal to raise the GST rate on services of cryptocurrency exchanges from 18% to 28%.
It seems like the GST council meeting will have a discussion on so many issues and hot topics in their next meeting which will be held next month.