No decision on extending GST compensation to states

The GST Council deferred the decision on levying a 28% tax on casinos, online gaming, horse racing and lottery pending more consultations with stakeholders. Further, no decision was taken on extending the mechanism to compensate states for the revenue lost from the implementation of GST beyond June 30.

Sources have told ET that the Centre has indicated that all the rate changes are likely to come into effect from July 16.

A two-day meeting of the panel considered a report of the GoM but deferred a decision as Goa and some others wanted to make more submissions. The GoM had recommended that online gaming should be taxed at the full value of the consideration, including the contest entry fee paid by the player on participating in the game.

In cases of race courses, it had suggested that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers. It also recommended that no distinction should be made on grounds of game of skill or game of chance for the purpose of the levy of GST and should be taxed at the highest rate of 28%.

States seek extension of GST compensation, no decision yet

Briefing reporters about deliberations at the two-day meeting of the GST Council, FM Sitharaman said finance and other ministers of 16 states spoke on the compensation issue. Of the 16 states, 3-4 spoke of evolving their own revenue stream to break from the compensation mechanism, she said.

The Centre did not reveal its mind on the issue.

When a nationwide Goods and Services Tax (GST) subsumed 17 central and state levies from July 1, 2017, it was decided that states will be compensated for any loss of revenue from the new tax for five years. That five-year term is ending on June 30.

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

The next GST Council meeting will be held in the first week of August in Madurai, Tamil Nadu.

(With inputs from agencies)

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