The GST Council, in its meeting on Tuesday, will take up a host of issues starting from evolving a consensus on rates and valuation base for online gaming, casinos, and horse racing to clarifying the taxability of MUV to TCS liability of suppliers engaged in e-commerce trading through Open Network Digital Commerce besides others.
The council, meeting for the 50th time, will be chaired by Finance Minister Nirmala Sitharaman and is expected to be attended by the Union Minister of State for Finance besides representative Ministers of 28 States and 2 Union Territories with legislatures (Delhi & Puducherry) and advisor of UT of Jammu & Kashmir. Revenue Secretary Sanjay Malhotra is Secretary to the Council while Vivek Johri, Chairman of the Central Board of Indirect Taxes & Customs will be the special invitee.
Officials confirmed that the focus of the meeting will be the inconclusive report of the Group of Ministers (GoM) on Online Gaming, Casinos, and Horse Racing. There is a broad agreement that a 28 per cent GST should be levied on all three supplies, but there is no consensus on the taxability of online games, as Goa suggested an 18 per cent tax on platform fees, they said. This is the second report, while the Council was going through the first report in June 2022 asked GoM to further deliberate on the issue after Goa raised some issues.
A final view on taxation rate as well as whether tax is to be levied on gross gaming revenue (GGR) or fees charged by the platform; or on the full-face value of bets put in by players of online gaming, horse racing, and casinos would be taken by the GST Council on July 11. Also, the Council, chaired by the Union Finance Minister and comprising State counterparts, has to decide on whether these three activities fall under the category of actionable claims of betting and gambling.
The second key agenda item would be demand of industrial units located in 11 Himalayan and North Eastern States for reimbursement of full Central GST and 50 per cent of net Integrated GST paid, officials said. Currently, the Centre reimburses 58 per cent of net CGST and 29 per cent of net IGST under a Central Government scheme -- ‘Scheme of budgetary support’ notified in October 2017.
However, industrial units located in the Himalayan and North Eastern States have been seeking implementation of a mechanism for reimbursement of the balance 42 per cent of the CGST and 21 per cent of the IGST paid by them in cash along with appropriate interest.
Supreme Court ruling
This agenda item has been included post the Supreme Court ruling on October 17, last year while disposing of a case filed by Hero Motocorp Ltd on the issue. The Court said, “Taking into consideration that lakhs of persons are employed in such industries, we are of the view that it will be appropriate that such States should also consider to correspondingly reimburse such units out of the share of revenue received by them through devolution from the Central government. We further find that it will also be appropriate that the GST Council considers making appropriate recommendations to the States in that regard”.
Another key item would be clarification on the TCS liability of suppliers engaged in e-commerce trading through Open Network Digital Commerce (ONDC) in cases where multiple operators are involved in a transaction.
So far, there is no clarity on who should be liable for TCS compliance under GST laws. Under GST law, every e-commerce operator is required to collect TCS at the rate of 1 per cent of the taxable value of goods/services sold through its platform. Now, according to officials, Law Committee has recommended to the Council that in a situation where multiple e-commerce operators (ECOs) are involved in a single transaction through the E-Commerce platform, the TCS compliance is to be done by the supplier-side, who finally releases the payment to the supplier.
On agenda
- Clarification on the definition of Multi Utility Vehicle (MUV) at par with SUV
- Import of medicines, and food for special medical purposes used in the treatment of rare diseases for personal use and by centres of excellence to be exempted from Integrated GST
- Popcorn, cold drinks, etc sold as part of the ticket to be treated as composite supply with a ticket as the principal supply
- Amending laws for an explanation of reasons for excess input tax credit (ITC) claimed or deposit
- Reconstitution of GoM for rate rationalisation