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The features of the budget support scheme that came in place of the previous ex-consumption tax exemption schemes for industrial units located in the Himalayan and northeastern states are likely to be discussed at the upcoming 50th meeting of the Goods and Services Tax (GST) Board to be held on July 11, with a focus on the payment mechanism of Before states for such units. In addition, the council is expected to discuss the ministerial report on online gaming, outline the details of the operation of the appeals court mechanism and clarify the definition of multi-use vehicles (MUVs), bringing them on par with SUVs for similar tax treatment with an offset tax of 30%. 22 percent, officials said.
District-based exemptions from excise duty for qualified manufacturing units in the Himalayan and North Eastern regions were removed under the GST regime, which was introduced from 1 July 2017. At the second meeting of the GST Board held in September 2016, it was discussed that: Entities exempted from paying indirect taxes tax in the GST system, and in case the state or central government decides to continue with any existing exemption/incentive/deferral scheme, it will be via the payment mechanism through the budget route.
The industrial units located in the Himalayan and North Eastern states are seeking to implement a mechanism to pay the remaining balance of 42 per cent Central Goods and Services Tax (CGST) and 21 per cent Integrated Goods and Services Tax (IGST) to be paid in cash along with appropriate interest plus 58 per cent Of the net CGST and 29 percent of the IGST is repaid by the central government under the budget support scheme put in place by the Ministry for the Promotion of Industry and Domestic Trade (DPIIT) in October 2017.
As of now, out of the eleven hill and north-eastern states, the state of Jammu and Kashmir pays the remaining balance of 42 percent of the GST, while no state pays the remaining 21 percent of the total GST.
Some companies, including HeroMotoCorp and Sun Pharma Laboratories Ltd, have previously approached the courts against reducing the 100 percent excise tax exemption advantage previously granted under the region-based exemption scheme. In October 2022, when the Supreme Court ruled that Hero MotoCorp’s claim based on promissory closure had no substance, it took note of the large number of people employed in such industries and took the view that states should consider reimbursement of these units of quota of the revenue they obtained through the devolution of power from the central government and asked the GST Board to look into the matter.
The GST Board has learned that it has received various representations of a mechanism for the State Governments to reimburse the balance of 42 per cent GST and 21 per cent IGST paid by them to make the projects located in the Himalayas and North Eastern states economically viable. States have been informed that they have been informed that they are not in a position to pay the remaining part of the GST, with Uttarakhand and Meghalaya saying that GST revenue growth was not satisfactory to provide additional incentives for these units.
The Council is also expected to discuss the second report of the Ministerial Committee on Online Games to reach a consensus on whether the tax will be imposed on the full value of bets placed or the total gaming revenue. Earlier, the group of ministers was of the same opinion that a flat rate of 28 percent should be imposed on online games, casinos and horse racing. Later when the decision was put up for review, the government could not come to a consensus on whether the tax levy should be on the full face value of the stakes or GGR, and thus, the final decision will be taken by the GST Board.
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