India is putting changes in the GST interest rate on hold until it can control inflation

India is putting changes in the GST interest rate on hold until it can control inflation – Mail Bonus

The optimization of goods and services tax (GST) is likely to be delayed due to inflationary pressures and geopolitical tensions, said a senior official in the Ministry of Finance as part of comments on the economy, asset sales and the government’s borrowing plan.

The center has sought legal advice on the sale of Pawan Hans and Central Electronics Ltd (CEL), which has been embroiled in allegations against successful bidders, the official said.

The government will currently adhere to its market lending program and explore other ways to raise funds to meet higher food and fertilizer subsidies and loss of revenue due to measures to curb inflation that have been taken in recent days.

The group of ministers (GoM) set up by the GST Council to review prices has yet to finalize its report.

Most essentials in a 5% album

But both the center and the state agree that it may not be the right time for such an exercise in light of high inflation in India. Fewer albums would mean that the GST on some items could rise, which could make products more expensive at the same time as consumer inflation has peaked at 7.79% in eight years.

“Interest rate optimization is difficult with inflation at this stage and we will have to wait until the situation improves,” the official said.

The GST Council will probably meet in June. It is expected to include a report by another government led by Meghalaya, Prime Minister Conrad Sangma, which is said to support the highest 28% of online gaming, racing and casinos. The Council is also expected to discuss an integrated GST on maritime transport, which was repealed by the Supreme Court in a recent order.

The council had launched GoM last year, led by Basavaraj Bommai, Karnataka’s minister, to propose changes to the GST tariff structure. It was tasked with proposing rate changes to correct reverse duty structures and also to reduce the number of GST caves from the current 5%, 12%, 18% and 28% to just three.

ET had reported that countries did not support changes in interest rates due to high inflation. Most necessities are in the 5% album.

Non-investment

The Center is investigating the sale of Pawan Hans and CEL before deciding on any action.

“We are considering a legal opinion on whether to start the process again or work again with the current bidders,” said the person in question, adding that the government requests suggestions from the Ministry of Law.

The government will increase monitoring of the investment process to avoid similar situations. It will continue with the planned privatization of two state-owned banks and try to complete the process this fiscal year, which will give it more capital.

The government has allocated 65,000 million rupees due to non-investment in FY23. The center will require all the funds it can raise to fund food and fertilizer subsidy bills, which can exceed budgets by 1.80 lakh crore.

The government will also lose tax revenue due to recent measures to curb inflation. The center announced on Saturday a reduction in excise duties on petrol and diesel, which is expected to cause a loss of revenue of ISK 1 million per year. Reducing import duties on steel and plastic inputs and scrapping certain cooking oils will also increase revenue losses.

Borrowing schedule

Officials have indicated that the government will stick to its FY23 borrowing target. It may use other means to finance the budget and even borrow from the Consolidated Fund of India with the permission of the parliament to continue with its spending plan for infrastructure, the cornerstone of its reconstruction plan.

“We have discussed the revenue impact and could go into other measures, including borrowing from the Consolidated Fund of India,” the official said, adding that the center does not intend to cut its estimated 7.5 lakh crore funding for FY23. Sources in the Ministry of Finance had indicated that the center might need an additional loan of 1 lakh crore.

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