GST Council meet on rate reform begins; TDP supports, opposition bloc seeks revenue protection
New Delhi (PTI): The 56th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, on Wednesday started deliberations on 'next-gen GST' reforms, which will lower tax rates on items of mass consumption, remove duty inversion in sectors, like textiles, and ease compliance burden for MSMEs.
The Council, over the next two days, will discuss reducing the number of slabs in GST to just two -- 5 per cent and 18 per cent -- and removing the 12 per cent and 28 per cent slabs. Also, a special 40 per cent tax has been proposed on a select few items, including tobacco and ultra-luxury goods.
As per the sweeping rate change proposal put forth by the Centre and vetted by a group of state finance ministers, as many as 99 per cent of items in the 12 per cent category, such as butter, fruit juices and dry fruits, would move to a 5 per cent tax rate.
Similarly, electronic items like ACs, TVs, fridges, and washing machines, as well as other goods like cement, will be among the 90 per cent of the items that will move from 28 per cent to a lower 18 per cent slab.
While opposition-ruled states have demanded that all states be compensated for the revenue loss they incur post the implementation of the GST rejig, Andhra Pradesh Finance Minister Payyavula Keshav said his state is supporting the Centre's GST rate proposals.
"As an alliance partner, we are supporting the Centre's proposal of GST rate rationalisation. It is in favour of the common man," Keshav told reporters before the Council meeting. Andhra Pradesh's Telugu Desam Party (TDP) is an ally of the BJP-led NDA government at the Centre.
Prime Minister Narendra Modi, in his Independence Day speech on August 15, unveiled the plan for GST reforms. Shortly thereafter, the central government shared a blueprint of the planned reform with a Group of Ministers (GoM) from different states for initial vetting.
As many as eight sectors -- textiles, fertiliser, renewable energy, automotive, handicrafts, agriculture, health and insurance -- will benefit the most from the rate overhaul, as per the Centre's blueprint for GST reforms.
On Wednesday morning, before the Council meeting, eight opposition-ruled states -- Himachal Pradesh, Jharkhand, Karnataka, Kerala, Punjab, Tamil Nadu, Telangana and West Bengal -- had their own meeting to formalise their strategy and reaffirmed their demand for revenue protection to give approval to the rate rejig.
Jharkhand Finance Minister Radha Krishna Kishore told reporters here that his state will suffer a Rs 2,000 crore revenue loss if the Centre's GST rate reform proposal is implemented.
"If the Centre agrees to compensate us for whatever loss we would incur, then we have no issues in approving the agenda before the Council. I don't think the issue will come up for voting, as in a federal structure, it is the responsibility of the Centre to compensate states for revenue loss," Kishore told reporters here after the meeting of the opposition bloc.
Under the present GST structure, the 18 per cent slab accounts for a lion's share or 65 per cent in GST collection. The 5 per cent slab contributes 7 per cent to the total GST kitty.
The top tax bracket of 28 per cent on luxury and sin goods contributes 11 per cent of the revenue, while the 12 per cent slab accounts for just 5 per cent of the revenue.
The Centre's GST reform proposal put forth before the Council rests on three pillars -- structural reforms, rate rationalisation and ease of living.
The structural reforms would ensure stability and predictability by providing "long-term clarity on rates and policy direction to build industry confidence and support better business planning".
On the 'ease of living' side, the finance ministry's proposal includes seamless, technology-driven GST registration, especially for small businesses and startups. It also suggested the implementation of pre-filled GST returns and faster, automated processing of refunds for exporters and those with an inverted duty structure.
"The next generation GST reforms... will set an economy absolutely open and transparent in the coming months and with further reduction in compliance burden, (reforms) will be making it easier for small businesses to thrive," Sitharaman had said on Tuesday at the Foundation Day celebrations of Tamil Nadu-based City Union Bank.
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India, Ethiopia elevate ties to strategic partnership as PM Modi holds talks with his counterpart
Addis Ababa (PTI): India and Ethiopia on Tuesday elevated their historical ties to a strategic partnership, as Prime Minister Narendra Modi held wide-ranging talks with his Ethiopian counterpart Abiy Ahmed Ali during which they discussed issues of bilateral and mutual interest.
Modi, who arrived here from Jordan on his maiden bilateral visit, was accorded a ceremonial welcome at the National Palace ahead of the bilateral talks, reflecting the vibrant India-Ethiopia relations rooted in shared history and a promising future.
"We are elevating India and Ethiopia relations to a strategic partnership. This step will provide new energy, new momentum and new depth to our ties," Prime Minister Modi said during the delegation-level talks.
He thanked PM Ali for his support in India's fight against terrorism. "The support of friendly countries in this struggle against terrorism holds great significance," Modi said.
"Today, we got the opportunity to deliberate on the key aspects of our cooperation, such as economy, innovation, technology, defence, health, capacity-building and multilateral cooperation. I am pleased that today, we have decided to double the student scholarship for Ethiopia in India," Modi said.
Modi said that India and Ethiopia have shared contact, dialogue, and exchange for thousands of years. The two countries, which are rich in languages and traditions, are symbols of unity in diversity, he added.
"Both countries are democratic powers committed to peace and the welfare of humanity. We are co-travellers and partners of the Global South. On international platforms, we have stood shoulder-to-shoulder," he said.
The two sides signed eight MoUs/agreements, including upgrading ties to 'Strategic Partnership', customs cooperation, establishing data center at the Ethiopian Foreign Ministry, UN Peacekeeping training cooperation, debt restructuring under G20, more ICCR scholarships and AI short courses for Ethiopians, and support for maternal and neonatal healthcare.
Modi said the African Union's headquarters in Ethiopia makes the country a meeting point of African diplomacy. "Inspired by the common vision of an inclusive world, in 2023, India ensured that the African Union became a G20 member," he said.
In 2023, during India’s G20 Presidency, the African Union was admitted as a permanent member of the G20.
Modi said that though this is his first visit, he felt a deep sense of belonging and warmth, reflecting the thousands of years of connection between the two countries.
On his part, Prime Minister Ali said the two countries share over thousands of years of connection through trade, diplomacy, education, culture and even in our food and traditions. "These ties continue to shape a deep friendship, collaboration and mutual respect between our people," he said.
"We also appreciate your consistent message that Africa's priorities must lead the partnership. These kinds of dignified, respectful messages for Africa are very important. Mr Prime Minister, keep pushing. That is the type of message we are expecting from all our trusted friends," Ali said.
He said this aligned fully with Ethiopia's development plan - African-owned, African-led, and African-defined.
"Today, we meet with a clear focus to shape a modern partnership, grounded in sovereignty, self-reliance and practical cooperation. Our cooperation is rooted in equality and South-South solidarity," he said.
"Our economy is performing strongly. Last year, we grew 9.2% and this year we are expecting 10.3% GDP growth. Besides GDP growth, our FDI inflow is also rising big time. India is the leading source for our FDI," he said.
"We have more than 615 Indian companies which are investing in Ethiopia. This all gives our cooperation a strong foundation of trust. I think our decision today that we elevate our historic relationship to a strategic relationship is the right decision," he added.
Ethiopia also conferred its highest award - The Great Honour Nishan of Ethiopia - on PM Modi. He is the first global head of state to receive this award.
Prime Minister Modi also went to the Friendship Park and Friendship Square in Addis Ababa with PM Ali.
In a warm and special gesture, PM Modi was earlier received by his Ethiopian counterpart at the airport and accorded a warm and colourful welcome.
"Ethiopia is a nation with great history and vibrant culture," Modi said.
PM Ali informed his Indian counterpart about the varieties of Ethiopian coffee during informal talks.
"At Addis Ababa airport, took part in a traditional Coffee Ceremony with Prime Minister Abiy Ahmed Ali. The ceremony beautifully highlights Ethiopia’s rich heritage," Modi said.
In a unique gesture, the Ethiopian Prime Minister drove Modi to the hotel.
On the way, he took a special initiative of taking PM Modi to the Science Museum and Friendship Park, which was not in the itinerary.
"Gratitude to Prime Minister Abiy Ahmed Ali for showing me glimpses of Ethiopian history and culture at the National Palace Museum in Addis Ababa. It was a powerful reminder of Ethiopia’s rich traditions," Modi said in a post on X.
The Nobel Peace Prize-winning Ethiopian PM’s special gestures show remarkable respect for Modi, sources said.
"Thank you Ethiopia for a welcome that was unforgettable. The Indian community showed remarkable warmth and affection. India-Ethiopia friendship is going to get even more robust in the times to come," Modi said.
When Modi arrived at the hotel, he was warmly welcomed by the members of the Indian community. Local artists performed dances. Some of them danced on the theme of the popular Hindi song 'Aisa Des Hai Mera' to welcome him.
On Wednesday, Modi will address the Joint Session of Parliament and share his thoughts on India's journey as the "Mother of Democracy" and the value that the India-Ethiopia partnership can bring to the Global South.
PM Modi arrived in Ethiopia from Jordan, where he held a one-on-one meeting with King Abdullah II at the Husseiniya Palace on Monday before the delegation-level talks.
India and Jordan also inked MoUs in the fields of culture, renewable energy, water management, digital public infrastructure and twinning arrangement between Petra and Ellora, aimed at giving a major boost to bilateral ties and friendship.
From Ethiopia, Modi will visit Oman on the final leg of this three-nation tour.
