The latest gathering of the GST Council, aptly labelled as its 38th meeting, resulted in an unprecedented voting scenario. The focus was on a proposal to standardize all lotteries with a uniform tax rate of 28%. Garnering a majority support from 21 states (with only seven states opposing), the vote concluded positively for the proposal. A shift of this kind is marked to roll out on March 1, 2020.
Understanding the Current Tax Scenario
Presently, the tax regime for lotteries is dual-rate based. State-run lotteries are taxed at 12%, whereas private players authorised by the state have to face a 28% tax rate. The recent voting sought to dismantle this variance and establish a flat tax rate for both categories.
Decisions Beyond Lottery Tax Rate
Apart from the central theme of the uniform tax rate on lotteries, the council also decided upon several other issues. One notable decision was to waive the late fee for GSTR-1 taxpayers who haven’t filed returns from July 2017 to November 2019. It had been proposed that if all the returns can be filed by January 10, 2020, no late fees will be charged. However, if defaulters miss the deadline, their e-way bills would be blocked. In relation to specific regional scenarios, modifications were also made for Jammu and Kashmir and northeastern states where the tax filing deadline for November has been extended to the year-end.
| Region | Tax Filing Deadline Extension |
|---|---|
| Jammu and Kashmir | End of the year |
| Northeastern States | End of the year |
Facilitating Industrial Growth
The GST Council showed its support for industrial growth by facilitating the creation of industrial parks. The council resolved that any entities with a 20% ownership by central or state governments will be exempt from GST payable for long-term land leases starting from January 1, 2020. Previously, this exemption was only applicable for entities with a 50% government stake. The Council also imposed a uniform tax rate of 18% on woven and non-woven bags effective from January 1, 2020.
Insight Into GST Council’s Functioning
The GST Council, formed under Article 279A, is an essential constitutional body that provides recommendations to the Union and State Government on issues pertinent to Goods and Services Tax. It was introduced by the Constitution (One Hundred and First Amendment) Act, 2016. The GST Council’s composition includes the Union Finance Minister as its chair, along with Union State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation of all states. The Council functions on the basis of cooperative federalism, where both the central and state governments have their own representation. The Economic Survey of 2017-18 also lauded the GST Council’s cooperative federalism technology, asserting its efficacy for other policy reforms.