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GST Council to discuss compensation to states, tax on online gaming on June 29

The two heavyweight subjects are on the agenda for June 29 after the interim report on rate rationalisation of the Group of Ministers was accepted on June 28.

June 28, 2022 / 06:38 PM IST

The GST Council is all set to discuss on June 29 the subject of compensation to states and what Goods and Services Tax (GST) to levy on online gaming and casinos.

According to sources aware of the council's discussions on June 28 in Chandigarh, the Group of Ministers' interim report on rate rationalisation was accepted in full on the first day of the meeting.

Another report on GST systems reform, submitted by the Ajit Pawar-led Group of Ministers, was also accepted, the sources said on the condition of anonymity as the deliberations of the council are private.

Finance Minister Nirmala Sitharaman will address the media on June 29 on the GST Council's decisions. The briefing is likely to be held at 4 PM, sources said.

The second day of the meeting will see two heavyweight subjects being discussed. Speculation is rife that the Council will approve a GST rate of 28 percent on casinos, race courses, and online gaming, as recommended by the Conrad Sangma-led Group of Ministers.

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The second subject of compensation to states is also slated to be discussed on June 29.

As per the law, states are guaranteed 14 percent growth in their revenues every year, with any shortfall to be provided from the compensation cess fund. However, this revenue guarantee is only for five years and is set to end on June 30. As such, several states have made representations to the Centre to extend the compensation period beyond this month.

On June 28, Chattisgarh's representative on the GST Council, TS Singh Deo, wrote to Sitharaman requesting a five-year extension to states' guaranteed revenue. According to Deo, Chattisgarh has suffered a revenue loss of almost Rs 14,000 crore over the last four years due to the GST regime. While this loss may have been compensated so far, Deo is of the opinion that once the compensation ends, states like Chattisgarh may not have the funds to spend on capital, social sector, and job creation.

"Almost all states have asked for the compensation period to be extended," a state official said on condition of anonymity.

"Representation has been made. Now the matter will be discussed tomorrow. We are hopeful of getting a positive response," the official added.
Siddharth Upasani is a Special Correspondent at Moneycontrol. He has been covering the Indian economy, economic data, and monetary and fiscal policies for nine years. Contact: siddharth.upasani@nw18.com
first published: Jun 28, 2022 06:38 pm
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