During the recent 50th GST Council Meeting, crucial decisions were made concerning the taxation of online gaming, horse racing, casinos, and multi-utility vehicles (MUVs). The Group of Ministers (GoM) approved a 28% Goods and Services Tax (GST) for online gaming, horse racing, and casinos, while MUVs will be subject to a 22% GST.
- In the 50th GST Council Meeting, the Group of Ministers (GoM) approves 28% GST on online gaming, horse racing, and casinos.
- Multi-utility vehicles (MUVs) have a 22% GST.
- Elimination of distinction between games of skill and chance for online gaming.
- Changes in GST law to clarify non-actionable claims for online gaming, horse racing, and casinos.
- Exemption of GST on cancer-fighting drugs and medicines for rare diseases.
- The gradual establishment of GST appellate tribunals.
- Reduction in tax rates for specific items such as fish soluble paste and LD slag.
- 5% GST rate for food and beverages in cinema halls.
GST Council Meeting 2023- Overview
FM Sitharaman highlighted that amendments would be made to the GST law to clarify that online gaming, horse racing, and casinos are not actionable claims, similar to lottery and betting. She emphasised that the discussions on online gaming during the council meeting were substantial, and efforts would be made to align with the regulations brought forth by the Ministry of Information Technology.
It is important to note that the effective date for implementing the 28 per cent GST on online gaming will be determined after the necessary amendments are made to the GST law.
Set Up of GST Appellate Tribunals
During the GST Council meeting, it was decided that GST appellate tribunals would be established in a phased manner. Initially, these tribunals will be primarily located in the capital cities of states and where high court benches are present.
The objective is for the GST appellate tribunal to commence its operations within the current fiscal year, as stated by Revenue Secretary Sanjay Malhotra.
Items Exempted from GST Rates
The GST Council also granted exemptions on specific items.
- Cancer-fighting drugs and medicines for rare diseases are now exempt from GST. This decision aims to alleviate the financial burden on patients requiring these critical medications.
- Additionally, satellite launch services provided by private operators have been exempted from GST.
- Furthermore, the tax rates for certain items have been reduced. Fish soluble paste and LD slag, previously subject to 18 per cent GST, will now be taxed at 5 per cent.
Clarification on GST Rates for Food and Beverages in Cinemas
The GST Council clarified that the GST rate applicable to food items and beverages in cinema halls would be 5 per cent.
Increase in GST Cess for MUVs
The GST Council approved an increase in GST cess for multi-utility vehicles (MUVs). MUVs meeting specific length and engine criteria will now attract a cess of 22 per cent, aligning them with sports utility vehicles (SUVs).
However, sedans will not be subjected to this higher cess. The tax incidence on companies producing MUVs will increase by 2 per cent. The decision allows companies the option to either pass the increased tax burden to consumers or slightly reduce their profit margins.
Industry experts expressed dissatisfaction with the GST Council’s decision to levy a 28 per cent GST on online gaming and horse racing. They anticipate potential legal challenges and a negative impact on the Indian gaming industry. Finance Minister Sitharaman clarified that the intention of the GST Council is not to harm these industries or states with casinos. She emphasized the complexity of the issue and the council’s thorough understanding before reaching a decision.
The GST Council’s decisions to impose 28% GST on online gaming, horse racing, and casinos, along with the 22% GST on MUVs, reflect efforts to streamline taxation and address industry-specific concerns.
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