GST Council Tackles Inverted Duty Anomalies

The Goods and Services Tax (GST) Council is prioritizing the resolution of inverted duty structures, a persistent issue where raw materials are taxed at a higher rate than the final products. This anomaly creates significant working capital strain for businesses and often results in prolonged disputes over tax refunds. Efforts to rectify these imbalances have been ongoing, with previous meetings seeing adjustments to tax rates for items like textiles and bicycles.

The Council is now broadening its focus to include other sectors, such as select railway parts, metal ores, and water pumps, aiming to correct similar tax inversions. Ministerial groups are diligently working on these issues, with one group reviewing the tax structure of the real estate sector. These deliberations are expected to inform future GST Council discussions and policy decisions.

These corrective measures, while crucial for easing business operations and improving credit flows, may take time to implement fully. The government is also set to review the revenue impact of recent tax rate cuts. Experts suggest extending refund mechanisms for input services and capital goods to further alleviate financial pressures on businesses.