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NEW DELHI: The Goods and Services Tax (GST) Council will on Wednesday examine demands from several state governments that the Centre should continue to make good their tax reform related revenue losses beyond June when the existing scheme expires.

The Council led by union finance minister Nirmala Sitharaman has agreed to look into the issue on Wednesday, the second day of the two-day meeting currently underway in Chandigarh, said a Council member familiar with discussions in the federal indirect tax body.

The current scheme of compensation, which ran for five years since the inception of GST in July 2017, expires at the end June. States have sought continuation of the scheme for up another to five years. The demand for an extension has only grown louder given that many states are facing financial difficulties following the devastating impact of the covid pandemic.

The provision for protecting states’ revenue comes to an end by 30 June and this must be continued for at least another five years, because particularly mining and manufacturing states, who are not consumers suffer revenue losses, Chhattisgarh commercial taxes minister TS Singh Deo wrote to union finance minister Nirmala Sitharaman on Monday. 

Kerala's finance minister K.N Balagopal in an interview on Tuesday said the state expects a five-year extension of the compensation scheme.

GST Council will also examine a report of a ministerial panel that has recommended a uniform 28% GST rate on horse racing, online gaming and casinos. The committee led by Meghalaya chief minister Conrad Sangma had proposed the rate of taxation as well as the base on which this rate should apply. Currently, businesses in these sectors are paying 18% GST, backed by court orders due to ambiguity on the subject.

The panel had recommended that the 28% rate should apply on the entry fee and on the value of the chips or coins purchased at a casino, but not on individual bets placed by the player. In the case of online gaming, 28% rate should apply on the full value of the consideration paid by the player for participation. The panel said that the 28% rate should apply on these businesses without any regard for whether it is a game of skill or chance or both. 

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