Confirming CNBC-TV18's report that GST Council is divided over levying sugar cess to raise funds for cane farmers, the Union Finance Minister Arun Jaitley, on Friday, said that a separate group of five ministers will make a recommendation on sugar cess.
"The council has recommended for setting up of a Group of Ministers (GoM) from state governments to look into the proposal and make recommendations, within two weeks," the GST Council said.
Jaitley in a press conference said, “Sugarcane farmers are in deep distress. A separate group of five ministers within two weeks will make a recommendation to meet contingency of this kind when the cost of a commodity is higher than its selling price. Committee will be announced within next two days."
In the meantime, West Bengal Finance Minister Amit Mitra said many states are concerned on the fundamental principle of cess.
Only Uttar Pradesh and Maharashtra supported sugar cess in the council.
Talking on Goods and Service Tax Network (GSTN), Jaitley confirmed CNBC-TV18’s newsbreak that council has agreed to convert GSTN into a 100% government company.
FM said, "Second important item discussed was change in ownership structure of GSTN. The original structure of GSTN is 49% held by the government and balance 51% by other entities. I had made a suggestion that this shareholding of 51% should be taken over by the government and divided equally between states and centre."
He added, “Eventually central government should hold 50% and state governments will hold 50% collectively. The collective share of state governments will be pro-rata divided among the states as per their GST ratios."
Currently, five private financial institutions - HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd - hold 51% stake in GSTN, which was incorporated on March 28, 2013, in the erstwhile UPA regime. The remaining 49% stake is with the centre and states.
GSTN has been set up to provide IT infrastructure and services to the central as well as state governments, taxpayers and other stakeholders for implementation of the GST.
On incentive to promote digital transactions, the 27nd GST Council meeting has recommended for setting up of a GoM from state governments to look into the proposal and make recommendations, before the next council meeting.
The proposal talks about concession of 2% in GST rate (where the GST rate is 3% or more, 1% each from applicable CGST and SGST rates) on B2C supplies, for which payment is made through cheque or digital mode, subject to a ceiling of Rs 100 per transaction, so as to incentivise promotion of digital payment.
The GST Council also approved new simplified filing system but will be rolled out only after 6 months. GST1 and 3B will continue till then.
Talking on new recommendations by the council, the Union Finance Secretary Dr Hasmukh Adhia said government may require an ordinance or a new law to impose sugar cess.
He said a separate sugar development fund may have to be created for this purpose.
Concerned over the arrears of cane farmers, GST Council has seen a proposal to levy cess up to Rs 3 per kilogram, said Adhia.
The West Bengal Finance Minister has said that Rs 3 sugar cess per kilo will yield Rs 6700 crore.For GST return simplification, Adhia said there will be three phased return simplification process and it may take approximately a year to complete.