45th Goods and Services Tax Council will meet today

India’s 45th Goods and Services Tax (GST) Council will meet today.

This is the first in-person meeting of the Council since the pandemic began. Finance Minister Nirmala Sitharaman will lead the discussion, which is expected to review concessional tax rates and compensation plans on essential medical supplies. They are also expected to announce an electronic portal for tax payments and claims.

The previous meeting in June slashed the tax rate and offered exemptions on medical supplies as coronavirus cases surged in India. This, combined with lower average GST rates overall, resulted in financial losses for state governments. To compensate the central government hiked taxes in other areas, like petroleum, much to the chagrin of middle and lower-income citizens.

The council is unlikely to extend tax cuts past the September 30 deadline to increase state revenues. Instead, expect them to raise rates on demerit and sin goods to make up for deficits. While the electronic portal will likely increase tax revenues short-term, a more permanent solution is necessary to stave off recession. Medium- to long-term, the Council most likely overhaul the system to include fuel, alcohol, and other daily use items to bring average tax revenues back to pre-GST levels.