GST Council Meet: No Decision On Extending Compensation To States

A final decision on this issue is likely to be taken at the next meeting of the Council to be held in Madurai in August, Finance Minister Nirmala Sitharaman said

Finance Minister Nirmala Sitharaman at the news meet of the final day of the 47th GST Council meeting, in Chandigarh on Wednesday.

Source : PTI

The 47th GST Council meeting, which ended in Chandigarh on Wednesday, could not take a decision on extending beyond this month the compensation paid to states for revenue lost from the implementation of the GST.

K Lakshminarayanan, Puducherry finance minister, said all states sought an extension of the compensation mechanism, but no decision has been taken.

A final decision on this issue is likely to be taken at the next meeting of the Council to be held in Madurai in August, Finance Minister Nirmala Sitharaman said at the news meet.

When the Goods and Services Tax (GST) was rolled out, states were promised compensation for revenue loss till June 2022. The compensation amount was raised from levying a cess in luxury, demerit and sin goods over and above the 28 per cent tax.

With two years being lost in the pandemic, states have sought an extension of this compensation mechanism.

The Centre, last week, notified extension of the compensation cess, levied on luxury and demerit goods, till March 2026, to repay borrowing that were done in 2020-21 and 2021-22 to compensate states for GST revenue loss.

The Council, the highest decision-making body of the indirect tax regime, which is headed by Union Finance Minister Nirmala Sitharaman and comprises representatives of all states and UTs, discussed the issue at the meeting, however, did not take a final call.

According to officials, the GST Council has decided to defer its decision on imposing a 28 per cent GST on online gaming by nearly two more weeks.

The council gave a ministerial panel a period of 15 days to finalise regulations needed for a proposed new tax regime for online gaming, casinos, and horse racing, Karnataka Chief Minister Basavaraj S Bommai reportedly said.

At present, online gaming is clubbed together with casino and horse racing in the country, and hence faces a GST of 18 per cent. This is imposed on the service fee a company charges for its online gaming services, and not on the winning amount.

According to official, a group of ministers (GoM) has been asked to further deliberate on the tax rate and the method of valuation of taxing online gaming, casinos, and horse racing.