New Delhi: The federal indirect tax body, the Goods and Services Tax (GST) Council, decided to impose a uniform 28% GST on online gaming, horse racing, and casinos on the full face value of bets on Tuesday.
It also decided to exempt certain drugs from the integrated GST (IGST) levied when they are imported for personal use.
Nirmala Sitharaman, the finance minister and chair of the GST Council, announced at a press conference that tax rates were reduced on four items: uncooked snack pellets, fish soluble paste, specific yarn, and LD slag, a waste of steel manufacturing utilised in some industries.
The Cancer Drug Dinutuximab (Quarziba), as well as three other items—medicines and food for special reasons used in the treatment of uncommon diseases as specified by the health ministry—were also exempted from the IGST by the Council.
Uncooked snack pellets and fish soluble paste will now be taxed at 5%, down from 18%, while a particular type of yarn will be taxed at 5%, down from 12%, according to revisions in tax rates. To be on level with fly ash and blast furnace slag, the tax rate on LD slag will be reduced from 18% to 5%.
The taxation of internet gambling, horse racing, and casinos is a contentious issue, and after significant consultation with ministers, the Council suggested changing the law to include a 28% tax on each activity on its full face value.
“Today, I’m pleased to report that a decision has been made. The GST law will be modified in certain ways. Simply put, online gambling, horse racing, and casinos would all be subject to a 28% tax on their entire face value, according to Sitharaman.
An official statement from the finance ministry explained that amendments to the GST law will be made to clarify that tax will be applicable on the face value of the chips purchased in casinos, on the full value of the bets placed with bookmaker/totalizer in cases of horse racing, and on the full value of the bets placed in cases of online gaming.
However, industry participants voiced their worries. E-Gaming Federation Secretary Malay Kumar Shukla referred to the decision as “an extremely unfortunate decision as charging a 28% tax on full face value will lead to a nearly 1000% increase in taxation and prove catastrophic for the industry.”
“A tax burden where taxes exceed revenues will not only make the online gaming industry unviable but will also boost black-market operators at the expense of legitimate tax-paying players, further undermining the industry’s image and capacity to survive,” Shukla said in a statement following the Council meeting.
The Council made the decision to simplify the definition of sports utility vehicles, which are subject to a 28% GST rate and a 22% cess. The current definition also applies to vehicles with an engine length greater than 4000 mm, an engine capacity greater than 1500 cc, and a ground clearance of 170 mm or higher, which are commonly referred to as “athletics utility vehicles.”
The mention of the SUV is eliminated from this. Additionally, it will be made explicit that ground clearance will be calculated in an empty vehicle.
According to the Council’s clarification, a vehicle no longer needs to be “popularly known as an SUV” to attract a 22% compensation cess as long as it meets a set of requirements related to height, ground clearance, and engine capacity. Large multi-utility vehicles like the Toyota Innova Crysta and Hycross, as well as the Maruti Suzuki Invicto, will now be subject to this 22% compensation cess.
MUVs that meet the aforementioned requirements will now pay taxes equal to those on full-sized SUVs like the XUV700 and Scorpio-N, with 28% GST and 22% compensating cess.
MUVs with engines smaller than 1500cc, such the Maruti Suzuki Ertiga, XL6, and Kia Carens, will continue to be subject to a 17% cess. Although vehicle ground clearance is normally certified in a burdened state, sources in the industry point out that the implications of the GST Council’s specification of “unladen” ground clearance would need more clarification.
The Council also resolved to add clauses to the national and state GST rules that would authorise states to demand electronic licences or way bills for the transit of gold within their borders.
Additionally, the Council resolved to require manufacturers of tobacco, pan masala, and other like goods to register their equipment and submit special monthly returns. Such manufacturers will be fined for failing to register their machines, according to the statement.
Sanjay Malhotra, the revenue secretary, who was there, indicated that there was confusion regarding the tax rate that applied to food and drinks consumed in movie theatres.
The Council made it clear that when sold separately from the movie ticket and not as a composite supply, they will be taxed at 5% rather than at 18%, the official said.
Malhotra further clarified that the purpose of the Centre’s decision last week to permit the Financial Intelligence Unit (FIU) to exchange information with GSTN, the organisation that handles tax returns, was to provide the tax authorities with more information. “GSTN is the recipient of information,” the representative said.
In order to support new businesses, the Council also voted to exempt private satellite launch services from GST.
