GoM to finalize the views on RCM, GST discount on digital payment at meeting on July 8

New Delhi, July 5 (KNN) The Group of State’s Minister will meet on July 8 to finalize the views on the Reverse Charge Mechanism (RCM) and GST discount on digital payment.

It is expected that at the Sunday’s meeting the concerned officials from the ministry will come up with the concrete proposal on both the issues for the GST council.

If the concrete plan comes out with the consensus of all the ministers, it will be taken up in the GST Council meeting for further discussion that is scheduled to be held on July 21.

The Group, headed by the Deputy Chief Minister and Finance Minister of Bihar, Sushil Kumar Modi along with Finance Minister of Punjab, Manpreet Singh Badal, Finance Minister of Kerala, Thomas Issac, and Finace Minister of West Bengal, Amit Mitra as members will be present during the discussion meeting.

Earlier, the group met in the month of April to discuss on RCM and in the month of May on GST discount but couldn’t reach at any consensus.

Now, there is an expectation that a firmed proposal will come out in this regard.

Reverse charge is a mechanism where the buyer of the good or service will have to pay GST, which is otherwise paid by the seller. The charge is applicable on a registered dealer, if he buys goods from a dealer not registered under GST.

However, the receiver of the good is eligible for input tax credit, while the unregistered dealer is not.

Though the scheme looks simple but it had generated lot of debate leading to the GST Council in its 22nd meeting held on October 6 to defer it till March 31, 2018.

It was also decided that the scheme would be reviewed by a committee of experts. Date for suspension has been extended twice and now the new date is September 30.

The GoM will also discuss GST discount for digital payment. Although, there is no consensus among States and it is unlikely that this will go through, still the group has to formally submit recommendations accepting or rejecting the proposal to the GST Council.

The proposal talks about providing “a concession of 2 per cent in GST rate on Business to Consumer supplies, for which payment is made through digital mode [one per cent each from applicable CGST and SGST rates, if the applicable GST rate is 3 per cent or more] subject to a ceiling of ₹100 a transaction.”

The scheme, however, would not be available to registered persons paying tax under the composition scheme.

Apart from this, it has been felt that the proposal is expected to benefit only those who are already doing digital transaction. Also, incentive is not much to encourage people to use digital means.

Another problem is that with differential rates, there will be a need to redesign the system which is again a tedious job.