All types of multi-utility vehicles (CUVs) with a length greater than 4 meters, an engine capacity greater than 1,500 cc and a ground clearance greater than 170 mm will become more expensive, the 50th Council decided on Tuesday. of the Goods and Services Tax, while specifying that online games would attract 28% GST on their “total face value”, even though it offered tax relief for specific cancer drugs, as well as food and beverages. drinks served in multiplexes.
Briefing the media after the council meeting, its Chairman and Union Finance Minister, Nirmala Sitharaman, said the scope of Sports Utility Vehicles (SUVs) had been widened to include MUVs. As per the ruling, like SUVs, all types of CUVs or Crossover Utility Vehicles (both Indian-only categories) would incur 22% compensation. Previously, the MUV royalty was 20%. “Ground clearance” would mean unladen ground clearance, she said, adding that sedans were not clubbed in this category of highest rate of clearance on cars, as proposed by Punjab. and Tamil Nadu. HT reported it on Thursday.
The board also on Tuesday settled a pending issue related to online gambling and decided to uniformly levy 28% GST on all three – casino, horse racing and online gambling – “on the face value of tokens purchased in the event casinos, on the total value of bets placed with the bookmaker/totalizer in the case of horse racing and on the total value of bets placed in the case of online games,” Sitharaman said. The council reached consensus on Tuesday after recommendations from a Group of Ministers (GoM) on the issue remained inconclusive.
Initially, the GoM – constituted to consider issues related to taxation on casinos, horse racing and online gambling – submitted its first report in June 2022 to the 47th meeting of the GST Council. The council requested the GoM to reconsider all issues. The GoM, in its second report, recommended that “since no consensus could be reached on whether the activities of online gambling, horse racing and casinos should be taxed at 28% on total face value of bets placed or on the GGR [Gross Gaming Revenue]“, the council can decide the matter, said a statement from the Ministry of Finance.
Speaking on the issue after the FM announced the decision on Tuesday, GoM Chairman and Chief Minister of Meghalaya, Conrad K Sangma said, “There were divergent views. After lengthy deliberations, the TPS Board has reached a decision [final] decision in a spirit of consensus. As a convention, barring one occasion, all council decisions have been unanimous since its inception in July 2017.
The CM said the board should take a balanced view between impact on industry and social concerns, in addition to ease of tax administration. Some members said it was an important source of income for small states such as Goa, and that a high tax rate would impact tourism, in addition to forcing these industries to move. , did he declare. In a media briefing, Revenue Secretary Sanjay Malhotra said the sector was still attracting a 28% face value tax and Tuesday’s council decision was more of a clarification. He said the government would continue to challenge all past legal disputes over the matter.
Pratik Jain, Partner, Price Waterhouse & Co LLP, said: “The decision to levy 28% on gross value in case of online gaming and casinos may not be what the industry was hoping for. Although this proposal has been indicated to be of a “clarifying” nature, it would have been better to make it forward-looking to end the past dispute. »
“The GST Board’s decision to levy 28% GST on the total face value of online games will significantly hog the gaming industry. The whole operation will not be feasible. The high tax burden will completely restrict cash flow, limiting a company’s ability to invest in research, innovation, expansion or survival,” said Mitesh Gangar, co-founder and director of PlayerzPot.
The higher burden will also put a hold on India’s huge gambling industry and deter a new player from entering the industry, he said. “The growth of the gaming economy will take a big hit and trigger economic strains, restrict job creation and slow down economic growth in the sector,” he added.
In order to provide relief, the council has decided to waive in-built GST or IGST (levied on the importation of goods) on the drug Dinutuximab (Quarziba) when imported for personal use. It has also been decided to exempt IGST on Medicines and Foods for Special Medical Purposes (FSMP) used in the treatment of rare diseases listed under the National Rare Disease Policy, 2021, said Sitharaman. In addition to personal use, the exemption is also extended to FSMPs when imported by centers of excellence for rare diseases or any person or institution on the recommendation of one of the listed centers of excellence.
To encourage private entrepreneurship, satellite launch services provided by private organizations have been exempted from GST in line with the exemptions enjoyed by ISRO, Antrix Corporation Ltd and New Space India Ltd (NSIL), said the Minister of Finances.
The council also reduced GST rates on several goods. The GST on uncooked/unfried snack pellets has been reduced from 18% to 5%, the tax on yarn or imitation zari yarn has been reduced from 12% to 5% and the GST rate on LD slag [waste produced during steel manufacture] has been reduced from 18% to 5% to encourage better use of this product and for the protection of the environment, she said.
“The GST Board has decided to equalize the GST offset tax on CUVs and SUVs. This means that all commercial vehicles will be subject to 28% GST and 22% compensation tax. This will bring certainty to the tax treatment of these vehicles, but it will also result in higher costs for consumers. Rising costs may result in higher taxi prices/taxi hire for common masses where commercial vehicles are used for travel,” said EY Tax Partner Saurabh Agarwal.