GST Council may approve 1% agri cess on luxury items

The GST Council meeting on July 21 is expected to reduce rates on a host of consumer items, including sanitary napkins and handloom textile, but may approve an additional 1% agriculture cess on luxury items to help ameliorate distress in the farm sector.

The additional cess on luxury items will, however, be subject to the attorney general's opinion on its applicability, an official privy to the matter said after a GST Group of Ministers' meeting in New Delhi on Wednesday morning.

The GoM chaired by Assam Finance Minister Himanta Biswa Sarma will recommend deferring a cess on sugar to the GST Council as it feels that the “urgency” of imposing a sugar cess has come down.

The move has come after the government last month fixed minimum selling price for sugar and introduced sugar release quota for mills to arrest falling prices.

Similarly, the panel will suggest the GST Council reduce the levy on ethanol to 12% from the present 18%.

Earlier, the GST Council had asked for a review of cess on sugar after states like Kerala, Andhra Pradesh and West Bengal protested saying the move would only benefit Uttar Pradesh, Maharashtra and Karnataka and would prompt other states like Kerala, West Bengal and Punjab to demand similar benefit for rubber, jute and food grains.

The states had warned that there would be no end to the demand for concessions and it would defeat the purpose of GST.

Amid the poor showing of exports from India, the GST Council may also consider exempting exporters from a 3% Integrated Goods and Service Tax (IGST) on inputs.