Lok Sabha Question No. 3500 (UNSTARRED), answered on 2022-08-08
Subject: Changes in GST Slab
Ministry: FINANCE
Asked by: Pratima Mondal

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA

## UNSTARRED QUESTION NO.3500

## TO BE ANSWERED ON MONDAY, AUGUST 8, 2022/SRAVANA 17, 1944 (SAKA)

## CHANGES IN GST SLAB

## 3500.  SHRIMATI PRATIMA MONDAL:

## Will the Minister of FINANCE be pleased to state:

- (a) the details of recent change in the Goods and Services Tax (GST) slabs;
- (b) the reason behind imposition of GST on essential food commodities; and
- (c)  the  reasons  behind  unpaid  GST  dues  to  States  by  the  Union  Government, specifically West Bengal?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a): GST  rates/ rate slabs applicable on goods and services are prescribed on the recommendations of the GST  Council, which is a constitutional body comprising of representatives  from  States/UTs  and  Centre.  At  present,  there  is  no  recommendation  from  the GST Council for change in the existing GST rate slabs.

(b): The GST Council, in its 47th Meeting held in Chandigarh on the 28th June, 2022, made a recommendation that instead of imposition of GST on certain specified goods bearing a brand name, the GST should apply on pre-packaged and labelled goods. This was done on the basis of a three layered process of examination which included the Fitment Committee of Officers from member states, followed by the Group of Ministers (GoM) on Rate Rationalisation constituted by the Council, and finally recommended by the GST Council. Certain producers of such branded goods,  including  of  reputed  brands,  were  misusing  the  earlier  provisions  and  avoided  paying GST  by  claiming  that  they  had  voluntarily  foregone  the  enforceable  right  in  respect  of  such brand name. This shift in approach of imposition of GST from certain specified goods bearing a brand name to pre-packaged and labelled goods was recommended by the GoM as a measure of prevention of such tax leakages.

(c): For the purpose of  payment of compensation to States for any loss  of revenue arising on account of implementation of GST for five years, a GST Compensation Cess is levied on select items under Section 8 of the GST (Compensation to States) Act, 2017. This is transferred into a non-lapsable Fund known as GST Compensation Fund which forms part of the Public Account of India as provided in Section 10(1) of the Act. All releases of compensation to States are done only  out  of  Compensation  Fund  as  per  section  10(2)  of  the  said  Act  and  not  from  the Consolidated Fund of India. Centre had borrowed and released Rs. 1.1 lakh crore for FY 2020-21 & Rs. 1.59 lakh crore for FY 2021-22 to States/UTs as back to back loan to meet the resource gap of the States/UTs due to shortfall in GST compensation. In addition, Government of India has further  released  Rs.  86,912  crores  to  States/UTs  on  31 st May,  2022  and  cleared  the  entire provisionally  admissible  GST  compensation  due  till  May,  2022.  The  State  of  West  Bengal received Rs. 6591 crores as their share. This decision was taken to assist the States in managing their  resources  and  ensuring  that  their  programmes  especially  the  expenditure  on  capital  is carried out successfully during the financial year. This decision has been taken despite the fact that only about Rs. 25,000 crores were available in the GST Compensation Fund. The balance around Rs. 62,000 crores were released by the Centre from its own resources pending collection of Cess. Now, only GST compensation for month of June, 2022 is pending to all States/UTs.

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