New Delhi: With many states opposed to raising GST rates, the GST Council Wednesday did not push an anticipated increase in rates of the tax to help the Modi government mop up higher revenues amid the slowdown.
But for the first time in its history, the council took a decision by voting rather than consensus, that has been the norm so far.
The council voted to levy a uniform 28 per cent tax on both state and private lottery. Earlier, lotteries sold by states were taxed at a rate of 12 per cent.
The new rate for lottery will come into effect from March 2020.
The vote was held after the council failed to reach a consensus with states like Kerala opposing the move.
Finance Minister Nirmala Sitharaman said after the meeting that every attempt was made to keep the tradition of arriving at a decision through consensus alive.
States not in favour of increasing rates
The council meeting came in the backdrop of slowing GST collections and the failure of the government to make timely compensation payments to the states. This had prompted the GST council to write to states to consider reviewing GST rates and cess as well as the items exempted under GST.
Until November-end, the government had collected around Rs 3 lakh crore in central GST revenues, which was only 58 per cent of the budgeted full-year target of Rs 5.26 lakh crore.
Compensation cess, collected by the union government and shared with the states, was at Rs 63,194 crore as of November-end, 58 per cent of the full-year target of Rs 1.09 lakh crore.
West Bengal Finance Minister Amit Mitra called for a complete overhaul of the GST and the GST network process to stop leakages and frauds to augment revenues. He said the officers’ committee made a presentation on the various rates but no decision was taken by the council adding that revenue concerns can be addressed if tax loopholes are plugged.
Delhi Deputy Chief Minister Manish Sisodia said most states agreed that any rate increases or change in tax slabs at the moment will be a knee-jerk reaction and that is not a good idea.
States favored plugging the existing loopholes, Sisodia added.
Meanwhile, Sitharaman said no concrete proposals on rate changes were put forward by an officers’ panel and there was only a presentation made on different scenarios.
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States unhappy with Centre
Many states expressed unhappiness over the delay in compensation payments to the states by the central government. The payment for August and September should have been released by October but was only released earlier this week.
Mitra added that from central government’s projections, it appears that there will be no money for compensation to states from February 2020.
Punjab Finance Minister Manpreet Badal also expressed displeasure over the delay in compensation payments, saying that the central government is defaulting on its constitutional obligations by not making timely compensation payments to the states.
Measures to check tax evasion
The GST Council also gave its nod to many measures to curb tax evasion, including blocking of e-way bill for those taxpayers who have not filed their tax returns, crackdown on fake invoices, blocking input tax credit in these cases and restricting input tax credit in case they are not reflected in their tax returns.
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