The 50th GST Council Meeting held on 11th July, 2023 emerged as a significant milestone in shaping the indirect tax landscape. With a keen focus on streamlining compliance, facilitating trade, and addressing ambiguities surrounding goods and services, the council put forth a series of recommendations. The Hon’ble Chairperson also released a short video film titled ‘GST Council – 50 steps towards a journey’ to depict the journey of the GST Council since its inception.

The following is a summary of the recommendations made at the 50th GST Council Meeting:

Recommendations relating to Casinos, Race Courses and Online Gaming:

•   Amendments in law to include online gaming and horse racing in Schedule III as taxable actionable claims
•   Casino, Horse Racing and Online Gaming to be taxed at 28%
•   Taxable Value determined as follows:
  • In case of Casinos: Face value of chips purchased
  • Horse Racing: Full value of bets placed with bookmaker/totalisator
  • Online Gaming: Full value of bets placed

Our comments: The GST council has made a significant and courageous decision regarding online gaming, which has the potential to initiate a multitude of legal disputes. The GST department has identified around 40 companies for investigation (as reported by Economic Times). The notice served to Gameskraft will now be contested in the Supreme Court by the department. We need to await the circular to comprehend the complexities, how it will be enforced, and the implications it will have on the gaming industry.

 Changes relating to Services

•  GST exemption will now be available on satellite launch services supplied by organizations in private sector as well to encourage startups. Earlier, this exemption was only available to such launch service provided by ISRO, Antrix Corporation Limited and New Space India Limited (NSIL).
• Goods Transportation Agencies (GTAs) need not file a declaration for paying GST under forward charge every year. If they have exercised such option in a financial year, it will be deemed to be exercised for succeeding financial years as well unless a declaration for paying GST under Reverse Charge Mechanism has been filed by them.
• The last date to provide declaration for paying GST under Forward Charge by GTAs has been extended to 31st March from 15th March of the previous financial year. 1st January of the previous financial year would be the start date for exercising of such option.
• Clarification has been provided in the case of services provided by a director to a company by way of renting of immovable property to the company whether in his private or personal capacity would not be taxable under Reverse Charge. It is only the services supplied by the director of the company or body corporate in his capacity as the director which would be liable to GST under Reverse Charge Mechanism.
• Clarification with regards to Food and Beverage (F&B) supply in cinema halls:
  • Taxable as restaurant service, which means it will be taxed at 5% instead of 18% (subject to reversal of  ITC), if it meets the following conditions:-
    • Supplied by way of or as part of a service and
    • Supplied independently of the cinema exhibition service
  •   Taxable as a composite supply of service (taxable at 18%) of exhibition of cinema if the sale of cinema ticket and the sale of food beverages are clubbed together as a bundled supply.

Changes relating to Goods

•  GST rate on unfried/uncooked snack pellets reduced to 5%.
•  The IGST payable on import of Dinutuximab (Quarziba) medicine has been exempted if imported for personal use.
•  IGST exemption made available on medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases enlisted under the National Policy for Rare Diseases, 2021 when imported for personal use subject to existing conditions
•  IGST exemption made available on import of FSMP by Centres of Excellence for Rare Diseases or any person or institution on recommendation  of any of the listed Centres of Excellence.
•  The supply of raw cotton or kala cotton is now clarified to be liable to tax under reverse charge basis when provided by agriculturists to   cooperatives.
•  The GST rate on imitation zari thread or yarn has been brought down from 12% to 5%.
•  The entry 52B in the compensation cess notification provides clarification regarding the applicability of GST compensation cess on utility vehicles. According to the amendment, all utility vehicles with a length exceeding 4000mm, engine capacity exceeding 1500 cc, and unladen ground clearance equal to or greater than 170mm will be subject to a 22% GST compensation cess. This applies regardless of whether they are categorized as MUVs (Multi-Utility Vehicles) or SUVs (Sports Utility Vehicles) as long as they meet the specified conditions.
•  As a means of making optimum utilization of the product and protection of the environment, the GST rate on LD slag has been brought down   from 18% to 5%.
•  The GST rate on fish soluble paste has been reduced from 18% to 5%.
•  In case of pan masala, tobacco products, etc., where it is not legally required to declare the retail sale price,  the earlier ad valorem rate as   applicable on 31st March 2023 would be notified for levy of compensation cess.
•  RBL Bank and ICBC Bank have been added to the list of banks/entities eligible for IGST exemption as per Annexure 4B (HBP) of Foreign Trade  Policy 2023 with regards to import of gold, silver or platinum.
•  There may be consequential changes in notifications in view of the Foreign Trade Policy 2023.

There are other trade facilitation measures including the measaures taken for streamlining the compliances which we will cover in the next blog.

In conclusion, the 50th GST Council meeting witnessed significant discussions and decisions that will impact various sectors. Overall, the GST Council meeting showcased the council’s proactive approach towards addressing challenges and ensuring a fair and efficient GST framework for the nation.