GST COUNCIL TO LEVY 28% ON ONLINE GAMING COMPANIES

 

Latest Context

Recently, the GST Council, in its 50^th Meeting, took the decision of levying a uniform 28%tax on full face value for online gaming, casinos, and horse racing while reducing the tax rate for uncooked/ unfired snack pellets, cancer medicine, imitation zari thread.

Key Note: For this, Government will bring an amendment GST Act, 2017, to include online gaming under it.

Main Highlights:

• Levy 28% GST on online gaming, horse racing, and casinos on full value: The GST council decided that there must be no difference between a 'game of skill and a game of chance. In their previous meeting, the Group of Ministers (GoM) made a consensus on the proposed taxes on the said activities but there was no consensus on online gaming because Goa recommended imposing an 18% tax on platform fees. As per the online gaming companies, the GST of 28% will not only create a hurdle for online gaming platforms' capacity to develop new games and technologies but will also be a jolt to their competitiveness in the market. Online gaming is a state subject under the Seventh Schedule of the Indian Constitution.
• Tax on food and beverages in Cinema Halls: The council declared that the GST on restaurants inside Cineplex will be levied by 5% GST against 18% earlier. A tax of 12% was levied on movie tickets that are below Rs. 100, while a tax of 18% GST was charged on movie tickets above the threshold before the change. The entire supply comprising tickets and supplies must be treated as a composite supply and taxed according to the applicable rate of the principal supply, which in this case is a cinema ticket.
• Council to exempt GST on cancer drugs: Moreover, the meeting also took the decision to exempt GST on import of cancer drug Dinutuximab, and Food for Special Medical Purposes (FSMP) which is used in the treatment of rare diseases. Presently, 12% integrated GST is levied on this drug.
• Council on Taxation on MUV: The GST Council also made a decision on the definition of utility vehicles in addition to tightening norms for registration clarity on the taxation of Multi Utility Vehicles (MUV). For MUV, the GST council took a decision to decide a levy of 22% compensation cess, except for Sedan.
• Council to set up Appellate Tribunal: During the meeting, the finance minister said that many states have requested benches. She added that no request will be denied.

Goods and Services Tax (GST)

• It is an indirect tax that is not directly paid by customers to the government. It came into effect on 1 July 2017 by way of implementing the 101st Amendment to the Constitution of India by the Indian government.
• Various indirect taxes such as - service taxes, VAT, excise and others in the country have been replaced by GST. It is collected as a levy on the manufacturer or seller of goods and the service providers.
• GST has five different tax slabs for the collection of tax - 0%, 5%, 12%, 18% and 28%.

Modes of GST: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and the Integrated Goods and Services Tax (IGST, on exports and imports).

GST Council

• President of India under Article 279A of the Indian Constitution is authorized to constitute a joint forum of the Centre and States called the GST Council. It contains the -

•  Chairperson - Union Finance Minister
•  Member - The Union Minister of State, in charge of Revenue of finance
•  Members - The Minister in charge of finance or taxation or any other Minister nominated by each State Government –

• It is an apex committee to modify, reconcile, or make recommendations to the Union and the States on GST such as the goods and services that may be subjected or exempted from GST, model GST laws, etc.
• By a majority of not less than three-fourths of weighted votes cast decisions are made in the GST Council.  Centre has a one-third weightage of the total votes cast and all the states taken together have two-thirds of weightage of the total votes cast.
• All decisions taken by the GST Council are made on consensus basis.

 

 

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