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The GST Council will be back in Srinagar after a gap of five years as next meeting is scheduled to take place there this month-end.
“The 47th meeting of the GST Council will be held on June 28-29in Srinagar,” the office of Finance Minister Nirmala Sitharaman said in a tweet on Thursday. Normally, the Council is supposed to meet once in three months, however, this time it has been delayed on account of various issues including re-nomination of Sitharaman.
Agenda of the meeting has not been finalised. However, the meeting is expected to be dominated by the issue of compensation to States besides consideration of report by Group of Minister (GoM) on online gaming, casinos & horse racing, review of some exemptions and rationalisation of inverted duty structure (IDS) on textiles and others.
Compensation period
Compensation payment period is going to end on June 30, as prescribed under law. However, States are pressing for extending the compensation beyond June. Now, one of the options is to amend the law to extend the compensation pay out. Alternatively, the Centre can provide a new mechanism by way of additional grants to some States.
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GoM to meet on Friday to discuss GST rate rationalisation
Likely to discuss inverted duty structure, exemptions; interim report may be presented to GST CouncilWith the introduction of GST, States were assured for compensation for loss of any revenue arising on account of implementation of GST as per the provisions of the GST (Compensation to States) Act, 2017 for five years. For providing compensation to States, Cess is being levied on certain goods and the amount of Cess collected is being credited to Compensation Fund. Compensation to States is being paid out of the Compensation Fund w.e.f. July 1, 2017.
Bi-monthly GST compensation to States for 2017-18, 2018-19 was released on time out of the Compensation Fund. As the States’ protected revenue has been growing at 14 per cent compounded growth whereas the Cess collection did not increase in the same proportion, Covid-19 further increased the gap between protected revenue and the actual revenue receipt including reduction in cess collection.
In order to meet the resource gap of the States due to short release of compensation, the Centre has borrowed and released ₹1.1-lakh crore in 2020-21 and ₹1.59-lakh crore in 2021-22 as back-to-back loan to meet a part of the shortfall in cess collection. Now, cess collection would continue for some more time, but amount collected would be used for payment of principal and interest. Last month, the Centre released around ₹87,000 crore to States as compensation saying entire dues till date has been paid. Now, cess collection would continue for some more time, but amount collected would be used for payment of principal and interest.
GoMs may get more time
The Council is also expected to discuss report by Group of Ministers (GoM) which suggested 28 per cent GST on online gaming, casinos and horse racing. There is also recommendation that GST be levied on the Gross Gaming Revenue.However, the Council is likely to give more time to another GoM which is going through rate rationalisation.
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