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PremiumGST Council meeting: The 50th GST Council has concluded in New Delhi on Tuesday. A 28% GST rate has been levied on full value of gaming , horse racing, and casinos which comes as a drawback to online gaming companies. Further, the council members exempted GST on key import of pharma products like cancer drug Dinutuximab, and Food for Special Medical Purposes (FSMP). Union Finance Minister Nirmala Sitharaman will hold a media briefing on the outcomes of GST council meeting. Prior to this, so far, the Council has held 49 meetings and its decisions have had a significant impact on the GST implementation in India.
Check all the latest updates on the GST Council meeting at Mint's LIVE blog:
Giving clarity on EDs sharing information on GST network, Revenue Secretary Sanjay Malhotra after the meeting said, "Under the recent finance ministry notification, it was clarified that it will only empower our tax authorities with more information. GSTN is a recipient of information."
Malhotra added, "It was clarified that ED is not getting any information, neither it is providing any information through this notification," adding, "the Director FIU shall provide information to empower authorities wherever they feel there's chance of tax evasion or money laundering."
Several opposition ruled states have expressed concerns over the government's decision to allow the enforcement directorate (ED) to share information with GST Network. Earlier, FinMin introduced an amendment to the provisions of the Prevention of Money Laundering Act (PMLA), 2002, under which ED will share information on GSTN which handles the technology backbone of GST, is included in the list.
The Council has recommended a mechanism for system-based intimation to the taxpayers in respect of the excess availment of ITC in FORM GSTR-3B vis a vis that made available in FORM GSTR-2B above a certain threshold, along with the procedure of auto-compliance on the part of the taxpayers, to explain the reasons for the said difference or take remedial action in respect of such difference. For this purpose, rule 88D and FORM DRC-01C to be inserted in CGST Rules, 2017, along with an amendment in rule 59(6) of CGST Rules, 2017. This will help in reducing ITC mismatches and misuse of ITC facility in GST.
According to the council, a circular to be issued to provide clarification regarding TCS liability under Sec 52 of the CGST Act, 2017 in cases where multiple E-commerce Operators (ECOs) are involved in a single transaction of supply of goods or services or both.
The Council has recommended that the relaxations provided in FY 2021-22 in respect of various tables of FORM GSTR-9 and FORM GSTR-9C be continued for FY 2022-23. Further, for easing compliance burden on smaller taxpayers, exemption from filing of annual return (in FORM GSTR-9/9A) for taxpayers having aggregate annual turnover upto two crore rupees, to be continued for FY 2022-23 also.
The Council has recommended the Rules governing appointment and conditions of President and Members of the proposed GST Appellate Tribunal for enabling smooth constitution and functioning of GST Appellate Tribunal. The Council also recommended that provisions of Finance Act, 2023 pertaining to GST Appellate Tribunal may be notified by the Centre with effect from August 1, 2023, so that the same can be brought into operation at the earliest.
Further the council has recommended the Chief Secretary of Maharashtra to be nominated as one of the members of the Search cum selection committee as per Section 110(4)(b)(iii) of CGST Act 2017. Regarding the number of State Benches, it was decided to start them in a phase wise manner.
The council said, "It has been decided to clarify that supply of food and beverages in cinema halls is taxable as restaurant service as long as (a) they are supplied by way of or as part of a service and (b) supplied independently of the cinema exhibition service. Where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply."
The council decided to exempt GST on satellite launch services supplied by ISRO, Antrix Corporation Limited and New Space India Limited (NSIL) may be extended to such services supplied by organisations in private sector also to encourage start ups.
The council said, it has been decided to include RBL Bank and ICBC bank in the list of specified banks for which IGST exemption is available on imports of gold, silver or platinum and update the list of banks /entities eligible for such IGST exemption as per Annexure 4B (HBP) of Foreign Trade Policy 2023.
According to the GST council, it has been decided that on pan masala, tobacco products etc, where it is not legally required to declare the retail sale price, the earlier ad valorem rate as was applicable on 31st March 2023 may be notified in order for levy of Compensation Cess.
has been decided to amend the entry 52B in compensation cess notification to include all utility vehicles by whatever name called provided they meet the parameters of Length exceeding 4000 mm, Engine capacity exceeding 1500 cc and having Ground Clearance of 170 mm & above and to clarify by way of explanation that ‘Ground clearance’ means Ground Clearance in un-laden condition.
The council decided to exempt IGST on Dinutuximab (Quarziba) medicine when imported for personal use.
Further, it has been decided to exempt IGST on medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases enlisted under the National Policy for Rare Diseases, 2021 when imported for personal use subject to existing conditions. Similarly, IGST exemption is also being extended to FSMP when imported by Centres of Excellence for Rare Diseases or any person or institution on recommendation of any of the listed Centres of Excellence.
Finance Minister Nirmala Sitharaman said the council approves reduction in GST rates for four items.
- Uncooked, unfried & extruded snack palettes brought down from 18 to 5 %.
- Fish soluble paste brought down from 18 to 5%
- LD slag to be at par with blast furnace slag. It has been changed from 18 to 5%.
- Imitation zari thread brought down from 12% to 5%.
The all-powerful Goods and Services Tax (GST) Council on Tuesday decided to impose a 28% tax on the turnover of online gaming companies, horse racing and casinos, finance minister Nirmala Sitharaman said.
Read here: Full list of items to be costlier and cheaper after 50th GST Council meet
Shivani Jha, Tech Policy Lawyer and Director, EPWA (E-Gamers and Players Welfare Association):
With so many regulatory and judicial developments in the sector, it seemed obvious that the GST Council will not tax gamers at par with the gamblers. This development indicates a increase from 1.8 rupees per 100 rupees spent on a game to 28 rupees on per 100. This will not only discourage players from playing, the professionals for whom its a livelihood will be burdened by taxation. It may also force them to play on offshore platforms, and the whole vision of creating a digital progressing gaming ecosystem seems blurry at this point.
Ankur Gupta, Practice Leader - Indirect Tax at SW India:
Ignoring the long-time demand of the gaming industry, levying a 28% tax rate on the gaming industry will be a big setback for 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.
With the advent of technology and the use of handheld devices, the online gaming market is fast growing at US$ 3 billion with more than 400 million users and is expected to grow rapidly in the next half a decade. Therefore, it was important to put taxability at par with global tax rates so that the Indian industry remains competitive.
In most countries the online gaming industry is taxable more or less at par with the current taxability of 18%, therefore, it's a disadvantage for Indian game companies if the taxability moves to 28%.
Even on the valuation, the taxability seems to be on the face value and not on margin / platform fee. Taxing the entire pool value will adversely impact the customers as well as they would get less playable value.
Online gaming stocks will be in focus during Wednesday's trading session after the 50th GST council meeting. In a setback, the council decided to impose 28% GST rate on the full value of online gaming.
Currently, among top gaming stocks are Rekha Jhunjhunwala-backed Nazara Technologies, Zensar Technologies, Delta Corp, OnMobile Global, Tech Mahindra and giant Tata Consultancy Services (TCS), Infosys among others.
In a major good news for movie lovers, the GST council in the 50th meeting chaired by FM Nirmala Sitharaman, decided to cut GST rate on food served in cinema halls to 5%. Earlier, the GST rate was 18%.
- Council decided to do away with the distinction of game of skill and chance in case of online gaming.
- 28% GST rate will be imposed on online gaming, casinos and horse racing.
- The tax rate will be levied on the full face value of bets at the entry point.
- Changes will be made in GST law that these three supplies are not actionable claims, like that of lottery and betting.
- Changes will come into effect after amendment in the GST law.
Sudhir Mungantiwar, Maharashtra forest cultural and fisheries minister told reporters that the GST council has approved setting up of appellate tribunals.
Among other developments, the GST council approved to exempt GST on import of cancer drug Dinutuximab, and Food for Special Medical Purposes (FSMP) that are used in the treatment of rare diseases.
The Finance Ministry tweeted saying that Finance Minister Nirmala Sitharaman will hold a media briefing on the outcomes of the 50th GST Council meeting in National Media Centre, New Delhi, TODAY.
The media briefing will begin at 7.15 pm (tentative).
Here's where you can watch the press conference:
The effective date for 28% GST rate on the full value of online gaming will be rolled out after the amendment of GST law.
Many netizens wonder whether this 28% tax rate is applicable for gambling and betting applications.
The GST council will levy 28% GST on full value of gaming , horse racing, casinos. Further, the West Bengal GST Council Representative said that the council decided to make an amendment as these are actionable claims.
This comes as a drawback for online gaming companies.
PTI reported, GST Council clears 28 per cent tax on online gaming on full face value amount, said West Bengal finance minister.
As per Vikas Jain at Reliance Securities, budgetary support for hilly states and cess on multi utility vehicles are likely to be taken up by the high-powered Council.
Among many recommendations, ASSOCHAM also expects clarification stating that Corporate Guarantees or Director’s Personal Guarantees.
As per the chambers, it sought clarification stating that Corporate Guarantees or Director’s Personal Guarantees issued for borrowing or letter of comfort for performance for group companies, should not be liable to GST. It said a transaction of corporate guarantee does not benefit the guarantor in any manner, but is only an act of safeguarding the interest of the group as a whole akin to a shareholder function. Hence, deeming such transactions as deemed supply and levying them to GST would result in a scenario where every act between related parties, though without consideration, would be liable to GST.
Accoring to ASSOCHAM, he Employee Stock Options (ESOPs) are key incentives to promote and retain talents in the corporates, especially amongst the start-ups. Thus,the ESOPs should be kept out of the GST dispensation as these are '' in nature of securities".
While the 50th meeting of GST council continues, ASSOCHAM on Monday made a strong case for making GST paid on expenses on the Initial Public Offerings (IPOs) eligible for input tax credit ,stating such an option is permissible under the GST Act.
'' GST paid on expenses towards IPOs are eligible for input tax credit, being expenses used in the course or furtherance of business,'' the chamber said in a comprehensive note submitted to the GST Council. It said a circular to this effect should be issued.
Further, ASSOCHAM Secretary General Deepak Sood said, ''IPOs have played a major role in raising equity capital for the companies , strengthening their balance sheets in the process. We would urge upon the GST Council to encourage companies to tap a vibrant capital market for expansion of their businesses and deleverage themselves''.
The apex industry organisation, after wider consultations with the stakeholders, said ''The only provision which will be applicable to ITC on goods and services used for IPOs shall be Section 16(1) of the CGST Act, 2017. This section permits companies to take ITC on goods and services used in or intended to be used in the course or furtherance of business''.
Finance Minister releases a Special Cover and customized myStamp on the occasion of 50th GST council meeting. The outcomes of the meeting is yet to be announced.
While 50th GST council meeting continues, the Income Tax department tweeted saying that over 2 crore Income Tax Returns (ITRs) for AY 2023-24 have already been filed till 11th of July this year as compared to 2 crore ITRs filed till 20th of July last year.
The department said, "Our taxpayers have helped us reach the 2 crore milestone 9 days early this year, compared to the corresponding period in the preceding year, and we appreciate the effort!"
As per a PTI report, several opposition ruled states expressed concern over Centre's decision to allow enforcement directorate (ED) to share information with GST Network, with finance minister of AAP-ruled Punjab Harpal Singh Cheema on Tuesday saying it amounts to 'tax terrorism' and scaring small business.
Delhi finance minister Atishi told reporters that a lot of ministers raised the issue including Delhi, Punjab, West Bengal, Tamil Nadu, Himachal Pradesh, Karnataka, Chhattisgarh, Telangana, and Rajasthan. Hence, he said, this issue should be discussed in the GST council.
Earlier, FinMin introduced an amendment to the provisions of Prevention of Money Laundering Act (PMLA), 2002, under which ED will share information of GSTN which handles the technology backbone of GST, is included in the list.
Nirmala Sitharaman released a short film titled 'GST Council - 50 steps towards a journey' on the occasion of 50th meeting of GST Council in New Delhi.
Nirmala Sitharaman Office 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 & has taken approximately 1500 decisions in the spirit of co-operative federalism.
Apart from FM Nirmala Sitharaman, the 50th meeting of GST council is also attended by MoS(F) Pankaj Chaudhary, FMs of States and UTs, RS Sanjay Malhotra, Chairman CBIC Vivek Johri, Board Members & senior officers from DoR, CBIC, State/UTs, GSTPW & GSTN.
The Group of Ministers have agreed that 28% of GST should be levied on online gaming, horse racing and casinos. however, a final view on taxation rate as well as whether tax is to be levied on gross gaming revenue (GGR) or fees charged by the platform; or on the full face value of bets put in by players of online gaming, horse racing and casinos would be taken today.
Six years after the rollout of the biggest indirect tax reform in India, Goods and Services Tax (GST) revenue of ₹1.5 lakh crore every month has become a new normal and tax officers are focusing on dealing with fraudsters who are adopting newer modus operandi to game the system, causing loss to the exchequer.
The GST Council is likely to clarify the definition of multi-utility vehicles (MUVs) and crossover utility vehicles (XUVs) for a levy of 22% compensation cess over and above the 28% GST rate.
The Council is expected to clarify the issue on Tuesday.
Toy manufacturers have urged the government for the immediate roll-out of the production linked incentive scheme to boost the growth of the sector. Besides, they have also asked the Centre to resolve a GST (Goods and Services Tax) anomaly.
"Mechanical toys attract a 12 per cent GST, and the tax on electronics toys is 18 per cent, "so if we add merely some light or music in a mechanical toy, that toy is classified as electronic toys. This is an anomaly and we have urged for its removal," Toy Association of India Chairman Manu Gupta said.
Ahead of the 50th GST Council Meeting, Joy Bhattacharjya, Director General at Federation of Indian Fantasy Sports (FIFS) told Mint, "We hope that the GST council will adopt a rational and forward-thinking approach. The GST Council should consider the recent regulatory developments before making any final decision. Established legal precedents and regulatory framework provide a solid foundation for a fair and comprehensive taxation framework. Levying GST on Contest Entry Amount will severely disrupt the sector, hindering capital inflow, impact growth and lead users to illegitimate, offshore platforms. Adverse taxation can also disproportionately impact start-ups, potentially leading to their closure".
Union Finance Minister Nirmala Sitharaman chaired the 50th meeting of the GST Council, in Vigyan Bhawan on Tuesday.
FM Sitharaman released a short film titled 'GST Council - 50 steps towards a journey' on the occasion of 50th meeting of GST Council in New Delhi.
FM Sitharaman on Tuesday released a special cover and customised myStamp on the occasion of the 50th meeting of the GST Council
50th GST Council meeting, chaired by FM Nirmala Sitharaman, underway in Delhi.
Delhi Chief Minister Arvind Kejriwal alleged on Tuesday that with the Goods and Services Tax (GST) being linked with the Enforcement Directorate (ED), even those traders paying the tax can be arrested by the federal agency.
Kejriwal hoped that people would oppose this development at the GST Council meeting on Tuesday.
The government has amended the provisions of the money-laundering law to allow the ED to share information with the GST network. The move would help in the recovery of the GST evaded through money laundering.
"A large proportion of traders do not pay GST -- some out of compulsion, some intentionally. A few days ago, the Centre also brought the GST within the purview of the ED. It means that now, if a businessman does not pay the GST, the ED will arrest him directly and bail will not be granted," Kejriwal alleged in a tweet in Hindi.
GSTN handles the technology backbone of the indirect-tax regime and is the repository of all GST-related information, including return, tax filing and other compliances.
"Online gaming is a profession for some of us, an increased GST is a deterrent. Our investments in buying equipment also doesn’t give us any input credit, and now the proposed regime seems harsh." Zerah is a professional gamer and CEO of Lxg
Ahead of the GST Council meeting, eSports Players Welfare Association (EPWA) director and Tech Policy lawyer Shivani Jha said, "Gamers must not be taxed the same way as Gamblers". The statement has come as the GST Council is likely to discuss the recommendations of a group of state finance ministers regarding the levy of 28% tax on online gaming, casinos, and horse racing on Tuesday.
Shivani added, "We hope that the council of ministers will take equitable steps to ensure an increased GST doesn’t discourage players from playing altogether".
The GST Council is likely to exempt cancer medicine Dinutuximab imported by individuals from tax. Besides, the import of medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases for personal use and also by centres of excellence are likely to be exempted from Integrated GST. Currently, such imports attract an IGST of 5% or 12%.
In a bid to check fake registration, the GST Council is likely to reduce the period to 30 days, from 45 days currently, for submission of PAN-linked bank account details of the person seeking registration with tax authorities.
The Council is likely to provide for mandatory physical verification of the business premises of "high-risk" applicants before granting GST registration.
At present, the GST officers are undertaking a special drive to catch fake registration. During the drive so far, 17,000 GSTINs were found to be non-existent. Of this, 11,015 GSTINs have been suspended and 4,972 have been cancelled, while ₹15,000 crore tax evasion has been detected.
The GST Council is likely to decide on a new rule in GST law under which businesses would be required to explain the reasons for excess input tax credit (ITC) claimed or deposit the amount with the exchequer.
The Committee has suggested that the provision should kick in if the difference is more than 20% and more than ₹25 lakh.
Currently, businesses use taxes paid by their suppliers commonly referred to as ITC to offset their GST liability while paying taxes in GSTR-3B.
In cases where the difference in tax liability declared in GSTR-1 and GSTR-3B exceeds the specified threshold of ₹25 lakh and 20%, the businesses are required to explain the reason for discrepancy or deposit the taxes.
Think tank Global Trade Research Initiative (GTRI) said small suppliers on e-commerce platforms should be permitted to undertake inter-state supplies without GST registration if their turnover does not exceed the threshold.
The GST Council has exempted small businesses making intra-state supplies through e-commerce platforms from taking GST registration if their turnover is below ₹40 lakh in case of goods and ₹20 lakh in case of services. The rule will kick in from October 1.
Now the GTRI has recommended that similar registration rules should be applicable for inter-state supplies done by micro and small businesses through e-commerce platforms.
Doctors, economists, and public health groups have urged the Goods and Services Tax Council to increase the compensation cess on all tobacco products in order to generate additional revenue for the government.
They argued that such a step of higher taxation will also motivate millions of tobacco users to quit and prevent youngsters from initiating tobacco use.
According to the global health body, raising the price of tobacco products through tax increases is the most effective policy to reduce tobacco use. Higher tobacco prices that decrease affordability encourage quitting among users, prevent initiation among non-users, and reduce the quantity consumed among continuing users.
The annual economic costs from all diseases and deaths attributable to tobacco use are estimated to be ₹1,77,341 crore in 2017-18 amounting to 1% of India's GDP.
Tobacco use which is a slow-moving pandemic itself claims the lives of 13 lakh Indians each year.
