GST Council defers decision on compensation to states

The GST Council Wednesday deferred a decision on extending compensation to states for the revenue lost from the implementation of GST beyond June 30 despite a dozen states cutting across party lines demanding extension.

A final decision is likely to be taken at the next meeting of the council in August.

Three-four states recommended an end to compensation," said Finance Minister Nirmala Sitharaman briefing reporters after the two-day meeting in Chandigarh, without revealing their names.

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The Council also postponed a decision to increase tax rates on casinos, online gaming, horse racing, and lottery and asked the Group of Ministers set up for the purpose to have more consultations with stakeholders and return to the Council on July 15.

The GoM had recommended that online gaming be taxed at 28 per cent.

"Keeping games of skill and games of chance at par and taxing both the games at a sin rate of 28 per cent will be detrimental to the nascent Indian online gaming sector. It is important for the GOM to adopt appropriate GST rates and valuation mechanisms based on international practices and the well-established legal jurisprudence of the Supreme Court. An incorrect valuation mechanism for gaming will hinder innovation, push the organized gaming sector towards the grey market and result in the externalization of gaming operators from India," said L Badri Narayanan, Executive Partner, Lakshmikumaran & Sridharan Attorneys.

But a number of goods such as pre-packed and labelled meat (except frozen), fish, curd, lassi, paneer, honey, dried leguminous vegetables, wheat and other cereals, wheat, jaggery, puffed rice will now attract a 5 per cent levy.

The GST Council also recommended a correction to the inverted duty structure for goods such as edible oil, coal, LED lamps, printing/drawing ink, finished leather, and solar water heater.

An 18 per cent GST will be levied on fees charged by banks for the issue of cheques (loose or in book form). A 12 per cent on maps and charts, including atlases. Unpacked, unlabelled and unbranded will continue to remain exempt from GST.

A 12 per cent GST will be levied on hotel rooms below Rs 1,000 per day against a tax exemption currently.