The GST Council is starting its second meeting tomorrow to confront the most difficult task of fixing the standard GST rate. Meeting will extend for three days. First meeting of the Council took pace last month where some easy works like exempting some states on the basis of geographical difficulty was decided. The North East and hilly states were awarded exemptions on several fronts.
The Finance Ministry has made November 22 as the deadline for settling big issues in front of the Council. More than that, next budget date has been set backward at around the first week of February. So completion of the GST framework at the earliest is necessary to roll out the tax at the targeted date of April 1, 2017.
Only after deciding the standard rate, the Council can decide on the rate for necessaries and that for non-merit goods like cigarette. A rate structure around 21% is on the card. The concessional rate of 12% and a penal tax rate of 40 is in the mind of several states.
The next meeting should address some of the unsettled issues that came after the first meeting. This include the completion of the compensation package design. Some states are still concerned about the fiscal autonomy loss for them after GST. Such issues should be solved through talk in the coming days.