New Delhi: In a first, the Goods and Services Tax (GST) Council held a vote on Wednesday – on the issue of imposing a uniform tax rate of 28% for both state-run and state-authorized lotteries. This is the first time a vote has been held in the 38 GST Council meets held so far.
All this time decisions were held through consensus, but this time Kerala’s finance minister Thomas Isaac demanded a vote, even if it meant breaking with tradition.
After the meeting, Union Finance Minister Nirmala Sitharaman said, ‘Every attempt was made to keep that set tradition alive, every attempt was made to convince based on opinion making in the house’. However, she said, the members said, that ‘rules allow voting and that tradition was not part of the rulebook’.
‘We went ahead with a decision to have a vote. So it’s not imposed by the Council, it’s not imposed by me as the Chair, but it was on a request from one member,’ she said.
A total of 21 members of the GST Council voted to impose a uniform rate for lotteries from March 1, 2020. A total of 7 states voted against it, while 3 abstained.
The Council did not decide to increase or tweak GST rates, something that was widely feared, but revenue enhancing measures were discussed. Opposition-ruled states also reiterated their unhappiness over not being assured of when the Centre would pay compensation cess.
Punjab Finance Minister Manpreet Singh Badal went as far as saying that this was close to a sovereign default. ‘We were aware the revenue position was grim, but we were not aware that it was so grim that the Union Finance Minister could not give an assurance in the Council whether states would be paid on time or not. As far as I am concerned, it is close to a sovereign default where the Government of India is unable to fulfill its constitutional obligation,’ he said.
Delhi’s Deputy Chief Minister and Finance Minister Manish Sisodia said when they asked why compensation was delayed despite over `40,000 crore in the compensation fund, they were not given an answer.
Kerala Finance Minister Thomas Isaac said, ‘It is a great disappointment that they are not even able to assure that they will give us our dues.’
Meanwhile, West Bengal Finance Minister Amit Mitra demanded a complete review of the GST process.
The GST Council has also made changes to the way input tax credit is claimed. In a case where there is a mismatch or details have not been uploaded by the suppliers, input tax claim will not exceed 10 per cent of the eligible credit available in respect of invoices or debit notes uploaded by the suppliers.
Other decisions at the meeting include:
- Tax rate on woven and non-woven bags rationalized to 18%.
- Exemption on long-term lease for industrial plots for industrial parks.
- Levy of penalty relaxed for non-filing of GSTR-1 from July 2017.