GST Council, the all-powerful Constitutional body comprising the Centre and all States, on Tuesday recommended 28 per cent rate at full face value for online gaming, casinos and horse racing. The Council also decided to exempt import of cancer drugs and food for special needs from GST, besides clarifying that food and beverages bought separately in a cinema hall is to attract GST at the rate of 5 per cent.

“It was a decision (28 per cent GST on online gaming, casinos & horse racing) more from a moral point of view. Killing an industry (online gaming) is not on our agenda. The focus is to have a simplified system,” Finance Minister Nirmala Sitharaman said in a press conference after the conclusion of 50th meeting of GST Council here. She said definition of online gaming will be in sync with the definition in the legislation being proposed by the IT Ministry. “Here, the aim is taxation only,” she clarified.

Following exhaustive discussions, the Council recommended that amendments be made in the law to include online gaming and horse racing in Schedule III as taxable actionable claims.  A Bill to implement the decision is expected during the forthcoming Monsoon Session.

“Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of horse racing and on the full value of the bets placed in case of the online gaming,” a statement issued by the Finance Ministry said.

Revenue Secretary Sanjay Malhotra said GST is to be applicable at the time of making payment for purchase of chip or placing bet. “For overseas companies providing online gaming facility here, we will ask payment channel to collect tax because payment has to be made here.”

Long-awaited

The Central Board of Indirect Taxes & Custom (CBIC) Chairman Vivek Johri clarified that 28 per cent rate will be applicable each time one is buying chip or placing bet. “This has nothing to do with winning or losing,” he said, adding that services provided will attract taxes separately.

The decision has come after almost 2 ½ years of deliberation. Earlier, a Group of Ministers (GoM) was constituted to look into the issues related to taxation on casinos, horse racing and online gaming. It submitted its report last year but was asked to look into all the issues once again. In its second report, it recommended that since no consensus could be reached, the GST Council should take a call on it.

GSTN & money laundering

The inclusion of GST Network (GSTN), the IT backbone of GST, in the list of entities that the Financial Intelligence Unit (FIU) can share information with under the Prevention of Money Laundering Act (PMLA) was not on the agenda. But it was discussed after Delhi’s representative Minister raised the issued alleging this will lead to undue harassment of taxpayers by ED. Other States, too, wanted a detailed explanation.

Malhotra said: “Enforcement Directorate is neither getting any information nor going to share the information. It is FIU which will share the information,” he said. Further, this arrangement has nothing to do with GST Law. “It was required under FATF (Financial Action Tax Force) mechanism and it will empower tax officials,” he explained.

Key decisions
Exemption of IGST on cancer treatment drug Dinutuximab (Quarziba) when imported for personal use
Food and beverages in cinema halls taxed like restaurant service, whether as part of service or independently of cinema exhibition
Cinema ticket and food and beverage supply clubbed together, to be taxed at 18%
Any vehicle with length exceeding 4 metres, engine above 1500 cc and ground clearance of 170 mm and above will be treated as an utility vehicle, regardless of SUV or MUV.
Rate on LD slag cut from 18% to 5%
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