India: GST Council slashes tax on major items, hikes rate to 28% on online gaming

The Indian tax regulatory body, the Goods and Service Tax (GST) Council, on Tuesday, made some major revisions to the tax structure after the conclusion of its 50th meeting.

While the government decided to trim the GST rate on some items, other sectors, such as the online game industry, received a major shock after it was decided to levy 28 per cent GST.

In a major decision during the meeting, GST on satellite launch services provided by private operators has been exempted.

Besides, the government decided to exempt cancer-related drugs, medicines for rare diseases, and food products for special medical purposes from the GST tax bracket.

GST trimmed on four items

The council also approved a GST rate reduction on four items. These are:

• Uncooked, unfried, and extruded snack palettes to a GST rate of 5 per cent from 18 per cent.
• Fish soluble paste to see 5 per cent GST rate from earlier 18 per cent.
• LD slag to be at par with blast furnace slag. It has been reduced from 18 per cent to 5 per cent.

GST cut on foods served in cinema halls

Furthermore, the council, headed by Union Finance Minister Nirmala Sitharaman, trimmed the GST rate on foods served in cinema halls from earlier 18 per cent to 5 per cent.

“It has been decided to clarify that the supply of food and beverages in cinema halls is taxable as restaurant service as long as (a) they are supplied by way of or as part of a service and (b) supplied independently of the cinema exhibition service,” it said.

“Where the sale of cinema tickets and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply.”

Change in definition of SUV

The finance minister also announced a change in the definition of SUV for levying cess.

Presently, the definition for levy of cess includes four parameters — should be popularly known as SUV, should be of length of 4 metres or above,engine capacity of 1,500 cc and above, and unladenground clearance of minimum 170 mm.

Now, she said, the SUV definition will include only the length (4 meters and above), engine capacity (1,500 cc and more), and ground clearance (unladenclearance of 170 mm and more).

Online gaming

Speaking on the decision to charge GST on online gaming, Sitharaman said that the panel decided to levy a 28 per cent GST on the face value or payments made for playing online games, bets in casinos and racing.

The tax rate was decided based on the recommendation of a group of ministers that looked at taxing casinos, horse racing and online gaming, she said.

The issue before the GoM (group of ministers) was whether to impose a 28 per cent GST on the face value of bets, gross gaming revenue, or just on platform fees.

Sitharaman said the tax will be levied on the entire value.

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