The Goods and Services Tax Council after its 50th meet in New Delhi on Tuesday has agreed to levy 28 per cent GST on online gaming, horse racing, casinos on full value.
GST council agreed that there should be no distinction between 'game of skill and game of chance.'
While the Group of Ministers (GoM) in their previous meeting broadly agreed for the proposed taxes on the said activities, there was no consensus on online gaming as Goa proposed to impose only 18 per cent tax on platform fees.
"GST of 28 % on the full value of gaming, horse racing and casino winnings will be a major damper to the gaming industry. The online gaming companies will be hit in a big way," said Parag Mehta, Partner, N.A. Shah Associates said.
The recent announcement by the GST council made will not only hamper online gaming platforms' capacity to develop new games and technologies but will also undermine their competitiveness in the market, said Aaditya Shah, COO, IndiaPlays.
A group of top online gaming firms represented by the FICCI Gaming Committee had urged the Central Board of Indirect Taxes & Customs (CBIC) not to hike the GST rate for the sector to 28 per cent as they cited it would be “extremely detrimental to the survival of the online gaming industry as no business operations can survive with such high taxation.”
Tax on F&B in Cinema Halls
The council announced that GST on restaurants inside Cineplex to attract 5 per cent GST against 18 per cent earlier.
Before the change, movie tickets below Rs 100 were taxed at 12 per cent, while those above the threshold attracted 18 per cent GST.
The council also shed light on the sale of cinema tickets and supply of eatables such as popcorn or cold drinks etc., when clubbed and sold together, the entire supply should be treated as composite supply and taxed as per the applicable rate of the principal supply, which in this case is cinema ticket.
Along with this, other products which will a reduction in GST are uncooked food palette, fish and soluble paste where the tax is 5 per cent from 18 per cent which was charged earlier.
"The concession rate on food and beverage sold at cinema halls has been approved and would now be taxable at 5% instead of 18% making cinema halls at par with restaurants. While the packaged drinks and foods are already being sold at an inflated rate will have to see how much customers will save with this concession," said Ankur Gupta, Practice Practice Leader, Indirect Tax at SW India.
Council to exempt GST on cancer drug
Further, the meeting also decided to exempt GST on import of cancer drug Dinutuximab, and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases. Currently, the drug attracts a 12% integrated GST.
"The GST Council’s decision to reduce tax rates and provide exemptions on specified products is a welcome move. Concerning cancer-related / rare disease medicine the cost of medicine is too huge and such an exemption will surely help the public at large. There were specific exemptions provided in a couple of cases but with this amendment, the upfront exemption will be applicable," said Gupta
Council on Taxation on MUV
Apart from the decision on GGR for online gaming, the GST Council also decided on the definition of utility vehicles and tightening of norms for registration.
A clarity on taxation of Multi Utility Vehicles (MUV) was provided.
The Council has agreed to the recommendation to levy a 22 per cent compensation cess for MUV, but Sedan has not been included in the list, the Finance Minister said at the press conference.
The Finance Minister said two states, Punjab and Tamil Nadu were against sedans being included in the list which will see a rise in GST being taxed.
Council to set up appellate tribunal
Finance Minister has said that many states during the meet have requested for benches. She added that no request will be denied.
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