From taxpayers to policy makers, all eyes are on the two-day meeting of the Goods and Services Tax Council (GST), starting Tuesday. The GST council, led by Finance Minister Nirmala Sitharman, is likely to discuss several key issues during the meeting. GST compensation to states, GST rate revisions on a few points, and simpler compliance standards for taxpayers are among the top agendas of the 47th GST council meeting.
Extending GST Compensation to States
When GST was introduced in 2017, the Center had assured states to compensate them for five years (base year 2015-16) for the loss of revenues resulting from the implementation of the new regime. Compensation to states will end on June 30, 2022. However, the cessation will continue on many sin and luxuries until March 2026. This move will help the Center repay the loans that helped bridge the states’ revenues deficit in the past two fiscal years, the Treasury Department said in a statement last week.
Ahead of the GST council meeting, Kerala Finance Minister KN Balagopal told CNBC TV-18, “We will ask for an extension of the fee period for five years. Not only Kerala, even other states will have an extension because the revenue growth is not as promised.
However, the Center is not in favor of extending the compensation ban for another five years, reports show.
GST rate revision
The Assembly Committee has recommended revising GST rates for a handful of articles. The committee proposed a uniform rate of 5 percent GST on prosthetics (artificial limbs) and orthopedic implants (trauma, spine and arthroplasty implants). It also recommended a 5 percent GST rate for various types of orthotics, such as splints, braces, straps and calipers. GST rates on ostomy appliances (including pouch or flange, ostomy adhesive paste, barrier cream, irrigation kit, sleeves, belt, micropore tapes) should be reduced to 5 percent, from 12 percent currently, the assembly committee advised other measures, among others.
GST Council is likely to discuss the rate adjustment suggestions and also clarify the categorization of the other items.
28% GST on Online Gaming, Casinos, Racecourses
A flat rate of 28 percent GST can be applied to popular online gaming, casinos and horse racing, as the Group of Ministers (GoM) has proposed. In May 2021, the Union government had established a panel of state ministers to examine the valuations of various services related to casinos, online gaming portals and racing courses for levying GST. The GoM are in favor of imposing 28 percent GST on various services from fantasy gaming, casinos and horse racing. The GST council is likely to make a decision on this at its June 28-29 meeting.
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