All types of multi-utility cars (MUVs) with period exceeding 4 metres, engine capability of over 1,500cc, and greater than 170mm floor clearance will turn out to be more expensive, the fiftieth Goods and Services Tax Council determined on Tuesday, whilst clarifying that on-line video games would draw in 28% GST on their “full face value” even because it equipped tax aid for explicit most cancers medicine, and meals and drinks served at multiplexes.
Briefing the media after the council’s assembly, its chairperson and Union finance minister Nirmala Sitharaman mentioned the scope of sports activities software cars (SUVs) has been expanded to incorporate MUVs. As consistent with the verdict, like SUVs, a wide variety of MUVs or crossover software cars (each uniquely Indian classes) would draw in 22% repayment cess. Earlier, the levy on MUVs used to be 20%. “Ground clearance” would imply floor clearance in un-laden situation, she mentioned, including that sedans have no longer been clubbed on this class of best cess fee on automobiles as proposed by way of Punjab and Tamil Nadu. HT reported this on Thursday.
The council on Tuesday additionally settled a long-pending topic associated with on-line gaming and determined to uniformly levy 28% GST on all 3 – on line casino, horse racing and on-line gaming – “on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with the bookmaker/totalisator in the case of horse racing and on the full value of the bets placed in the case of the online gaming”, Sitharaman mentioned. The council arrived at a consensus on Tuesday after suggestions of a Group of Ministers (GoM) at the topic remained inconclusive.
Initially, the GoM – constituted to appear into the problems associated with taxation on casinos, horse racing and on-line gaming – had submitted its first record in June 2022 to the forty seventh GST council assembly. The council requested the GoM to have a look at the entire problems once more. The GoM, in its 2d record, beneficial that “since no consensus could be reached on whether the activities of online gaming, horse racing and casinos should be taxed at 28% on the full face value of bets placed or on the GGR [Gross Gaming Revenue]The council may decide the matter, a finance ministry statement said.
Speaking about the matter after the FM announced the decision on Tuesday, GoM chairman and Meghalaya chief minister Conrad K Sangma said: “There were divergent views. After much deliberations, the GST council took a [final] decision in the spirit of consensus. As a convention, barring one occasion, all decisions of the council are unanimous since its inception in July 2017.
The CM said the council had to take a balanced view between impact on the industry and social concerns, besides ease of tax administration. Some members said that it was an important source of revenue for smaller states such as Goa, and a high tax rate would impact tourism, besides it would force these industries to shift out, he said. While briefing the media, revenue secretary Sanjay Malhotra said the sector always attracted 28% tax on face value and the council’s decision on Tuesday is more of a clarification. He said the government would continue to contest all legal disputes of the past on this matter.
Pratik Jain, partner, Price Waterhouse & Co LLP, said: “The decision to levy 28% on gross value in case of online gaming and casinos is perhaps not what the industry was hoping for. While it has been indicated that this proposal is ‘clarificatory’ in nature, it would have been better to make it prospective to put the past dispute to rest.”
“The GST council’s decision to levy 28% GST on total face value on online gaming will corner the gaming industry in a big way. The overall operations will not be feasible. The high tax burden will completely restrict the cash flow, limiting a company’s ability to invest in research, innovation, expansion or survival,” said Mitesh Gangar, co-founder & director, PlayerzPot.
The higher burden will also put a blocker on India’s massive gaming industry and deter a new player from entering the industry, he said. “The rising gaming economy will take a big hit and trigger economic stress, restrict job creation and curtail economic growth within the sector,” he added.
In a transfer to supply aid, the council determined to exempt built-in GST or IGST (levied on import of products) on Dinutuximab (Quarziba) drugs when imported for private use. It has additionally been determined to exempt IGST on drugs and meals for particular scientific functions (FSMP) used within the remedy of uncommon sicknesses enlisted underneath the National Policy for Rare Diseases, 2021, Sitharaman mentioned. Besides private use, the exemption may be prolonged to FSMP when imported by way of facilities of excellence for uncommon sicknesses or any individual or establishment on advice of any of the indexed facilities of excellence.
In order to inspire personal entrepreneurship, satellite tv for pc release services and products equipped by way of personal organizations were exempted from GST consistent with such exemptions to be had to ISRO, Antrix Corporation Ltd and New Space India Ltd (NSIL), the finance minister mentioned.
The council additionally lowered GST charges on a number of items. GST on raw/unfried snack pelletshas been lowered from 18% to five%, tax on imitation zari thread or yarn has been lowered from 12% to five% and GST fee on LD slag [waste produced during steel manufacture] used to be slashed from 18% to five% to inspire higher usage of this product and for cover of our surroundings, she mentioned.
“The GST council has decided to bring the GST compensation cess on MUVs and SUVs on a par. This means that all utility vehicles will attract a GST of 28% and a compensation cess of 22%. This will bring certainty to the tax treatment of these vehicles, but it will also lead to higher costs for consumers. The increased cost can lead to increased pricing of taxis/ rent-a-cab for the common masses where utility vehicles are being used for travel,” mentioned Saurabh Agarwal, tax spouse, EY.