GST Council Meet 2023: FM Sitharaman said that changes will be made in the GST law to state that these three supplies are not actionable claims, like that of lottery and betting.
The Group of Ministers (GoM) on July 11 decided to levy a 28 percent GST on the full value of online gaming, horse racing and casinos with no distinction between games of skill and chance in the 50th GST Council Meeting, Finance Minister Nirmala Sitharaman said on July 11.
“GST Council has decided that online gaming, casinos and horse racing will be taxed at 28 percent at entry point on full face value of bets,” FM Sitharaman said.
FM Sitharaman said that changes will be made in the GST law to state that these three supplies are not actionable claims, like that of lottery and betting.
“GST Council’s discussions today on online gaming were substantive. The Council will ensure it is in touch with IT ministry. We will align with the regulation the ministry brings in,” the FM added.
However, the effective date for the 28 percent GST levy on online gaming will roll out after amendments to GST law, Sitharaman clarified.
Moreover, Sudhir Mungantiwar, Maharashtra forest cultural and fisheries minister, said the council has decided to do away with the distinction of game of skill and chance in case of online gaming.
Currently, online betting and gambling attract 28 percent GST, irrespective of whether it is a game of skill and chance. Other games attract an 18 percent levy on gross gaming revenue (GGR).
‘Not targeting any industry,’ says Sitharaman
“The GST Council’s intention is not to hurt the online gaming industry or states with casinos. A few states shared their concerns. But there is a moral question: can we encourage them more than essential goods? So I am proud to say that the GST Council discussed and understood the matter deeply and took a decision which had been pending for 2-3 years. The issue is very complex,” Finance Minister Sitharaman said.
GST appellate tribunals to be set up
GST appellate tribunals to be formed in phases. GST appellate tribunals in first phase are to be mostly set up in capital cities of states and where high court benches are there, FM Sitharaman said.
GST appellate tribunal should start functioning in this fiscal year, Revenue Secretary Sanjay Malhotra said.
Items exempted from GST rates
The GST Council also decided to exempt cancer fighting drugs and medicines for rare diseases from the levy, the FM said.
The Council exempted GST on import of cancer drug Dinutuximab, and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases.
Also, GST on satellite launch services provided by private operators has been exempted, the FM added.
Rates on fish soluble paste, LD slag from 18% to 5%
Rates have been brought down on four items, including fish soluble paste and LD slag from 18 percent to 5 percent, Sitharaman said.
Tax on food and beverages in cinemas will be 5%
GST Council has clarified that the GST rate on food items and beverages in cinema halls will be five percent, Revenue Secretary Sanjay Malhotra said.
22% cess on MUVs but sedans are not included
GST cess has been increased from current 20% to 22% in MUVs that meet the length, engine criteria. Tax incidence on companies will increase by 2%.
Rs 17,000 crore tax evasion found in drive against fake input tax credit
In the drive undertaken by the taxation department against fake input tax credit, a total tax evasion to the tune of Rs 17,000 crore was found, the Revenue Secretary said.
GST on casinos, horse racing, online gaming: Industry experts unhappy
Industry experts were extremely unhappy with the GST Council’s decision on 28 percent GST on online gaming, horse racing.
“Levying a 28% tax rate on the gaming industry will be a big setback for the Indian players. We will need to see the fine print of notification if any exceptions are created. We might immediately see notices being issued to the gaming players for differential tax and with this new series of litigation,” said Ankur Gupta, Practice Leader (Indirect Tax), SW India.
Sudipta Bhattacharjee, Partner, Khaitan & Co said, “This is completely against the vision of the government to promote online gaming in India. The findings of the Karnataka High Court in Gameskraft with respect to the distinction between a game of skill and a game of chance has not been appreciated. It will need to be seen if the prescribed methodology to tax online gaming will pass the test of constitutionality. In any case this cannot be implemented retrospectively.”
The GST Council is responsible for making decisions related to GST rates, rules, and regulations, and any changes to these policies require a consensus among the council members. The decisions made by the council can have significant implications for businesses and consumers in India.
The report on taxation of online gaming, casinos and race courses was submitted by GoM convener Meghalaya Chief Minister Conrad Sangma to Union Finance Minister Nirmala Sitharaman in December.
Sangma, after presenting the report back then, had said that the GoM could not arrive at a consensus and has presented the report with divergent views. He further added that it is now for the GST Council to take a final decision in the matter.
The Group of Ministers in the GST Council, convened by Meghalaya Chief Minister Conrad Sangma, has members from eight states– West Bengal, Uttar Pradesh, Goa, Tamil Nadu, Telangana, Gujarat and Maharashtra.
Before the 50th meeting, Finance Minister Nirmala Sitharaman Office had tweeted, “The 50th meeting is a milestone which indicates success of cooperative federalism and establishment of a good & simple tax regime.”
Prior to the 50th meet, the council has so far held 49 meetings and has taken approximately 1,500 decisions in the spirit of co-operative federalism.