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Work in progress: On the GST Council meet and
issues
The 50th GST Council meet lifts the fog on many areas;
execution holds the key
Meeting after nearly five
months, the Goods and Services Tax (GST) Council on
Tuesday unravelled some knotty issues that were hanging
fire for a long time, such as the constitution of
Appellate Tribunals and the tax treatment for the
booming online gaming industry. With the appointment
norms for tribunal members cleared, the Centre has given
an assurance that the first set of tribunals should
become operational in four to six months. While States
have proposed 50 tribunal benches, these will come up in
a phased manner, beginning with State capitals and
cities with High Court benches. Industry may hope for
quicker redress of mounting GST litigations clogging up
courts. On the other hand, businesses have reacted with
much consternation to the Council’s decision to finalise
a 28% GST levy on the face value of all bets placed in
online games, casinos or horse-racing, with many
e-gaming players terming it a death knell for the
growing industry and its thousands of jobs. This was not
a hasty decision, having been considered by a
ministerial group of the Council not once, but twice
since its formation in late 2020. Finance Minister
Nirmala Sitharaman said the Council acknowledged that
Goa and Sikkim rely heavily on casino-driven tourism
revenues, but also examined the moral question of
whether this can be equated to the more compassionate
tax treatment warranted for essential goods and
services. With the Electronics and IT Ministry also
formulating a policy for online gaming, this decision,
requiring an amendment to the GST law, may yet need some
review and fine tuning.
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The Council also granted tax exemptions, reduced or
clarified some rates and regularised past incongruencies
in tax payments on some items owing to confusion about
their classification. So, food and beverages in cinema
halls will now attract a lower 5% GST, as would unfried,
uncooked snack pellets, fish soluble paste and imitation
zari yarn. It is not clear why the Council took six
years after the GST regime’s launch to tweak these
rates. Exempting drugs imported for cancer and some rare
diseases, for instance, could have been envisaged
earlier as well, just as the intended higher tax levy on
sport utility vehicles could have been. Dissuading the
use of larger personal vehicles is an obvious necessity
for a country where traffic congestion is intense and
widespread. The impact of some decisions on individual
sectors will depend on the fine print, but the Council,
which may meet less frequently in the upcoming poll
season, has taken its eye off the promised overhaul of
GST rates. No successor was named to steer the
ministerial group on rate restructuring, previously
helmed by erstwhile Karnataka Chief Minister, B.S.
Bommai.
Source::: THE HINDU,
dated 14/07/2023.
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