The Goods and Services Tax (GST) Council, the apex decision-making body for GST matters, held its 50th meeting on 11th July 2023 at Vigyan Bhawan, New Delhi. The meeting was chaired by Union Finance Minister Nirmala Sitharaman and attended by finance ministers and officials from all states and union territories. The meeting marked the half-century of GST Council meetings since the implementation of GST in July 2017.
The GST Council discussed and announced several key decisions regarding changes in GST rates, exemptions, cesses, and compliance measures. The decisions are expected to have significant implications for various sectors, taxpayers, and consumers. Here is a summary of the main outcomes and impacts of the 50th GST Council meeting.
The GST Council made the following changes in GST rates and exemptions for various goods and services:
The GST rate for these activities was increased from 18% or 28% (depending on the nature of the game) to 28% on the full-face value amount. This means that the GST will be levied on the players' entire amount wagered or paid without any deduction for prizes or commissions. This decision will likely hurt the online gaming industry, which has grown rapidly in India. The industry has expressed disappointment and concern over the high tax rate, which could affect its viability and competitiveness. The GST Council also amended Schedule 3 of the GST Act to include these activities as services supply to avoid ambiguity or litigation.
The GST Council granted exemption from GST for imported medicines and FSMP used to treat rare diseases listed under the National Policy for Rare Diseases. The exemption will also apply to FSMP imported by Centers of Excellence for Rare Diseases or recommended institutions. This decision is expected to benefit patients suffering from rare diseases, who often face high costs and difficulty accessing these products.
Dinutuximab (Quarziba) medicine for personal use from GST. This medicine is used for treating neuroblastoma, a type of cancer that affects children.
The GST rate for food served in cinema halls was reduced from 18% to 5% without input tax credit (ITC). This decision is expected to benefit cinema-goers, who often complain about the high prices of food items in multiplexes and theatres. The decision may also boost the recovery of the cinema industry, which has been severely affected by the Covid-19 pandemic.
The GST Council reduced the rate for four items: uncooked/unfried snack pellets, fish-soluble paste, imitation zari threads, and LD slag. The GST rate was reduced from 18% to 5% for the first three items and 18% to 5% for the last item. These items are mainly used by small and medium enterprises (SMEs) and farmers. The rate reduction is expected to benefit these sectors by lowering their input costs and enhancing their competitiveness.
The GST Council exempted private satellite launch services provided by private organizations from GST. This decision is expected to encourage private participation and innovation in the space sector, which the government has recently opened up. The decision may also help India become a global hub for satellite launch services.
The GST Council also discussed and announced several changes in compliance measures to simplify and streamline the GST system. These include:
The GST Council approved the setting up GSTATs at various locations nationwide. GSTATs are the second forum of appeal for taxpayers aggrieved by orders passed by appellate authorities under GST. GSTATs are expected to reduce the burden on taxpayers and courts by expediting and resolving indirect tax disputes.
The GST Council amended the law to factor in the latest e-invoicing timelines. E-invoicing is a system of generating invoices electronically on a common portal and reporting them to the government. E-invoicing was made mandatory for taxpayers with a turnover of more than Rs.100 crore from January 2023 and those with a turnover of more than Rs.50 crore from April 2023. However, in June 2023, the government introduced a 7-day time limit for reporting e-invoices on the portal, which created confusion and difficulties for taxpayers. The government later postponed the time limit by three months and is yet to announce the new implementation.
The GST Council discussed major reforms in the GSTN, the IT backbone of the GST system. The reforms include improving the user interface, enhancing data analytics, integrating Aadhaar authentication, and enabling pre-filled returns. The reforms aim to facilitate trade, improve compliance, and prevent tax evasion.
The 50th GST Council meeting was a landmark event in the history of GST, as it marked the completion of four years of the indirect tax regime. The meeting also witnessed several important decisions that will significantly impact various sectors, taxpayers, and consumers. The decisions reflect the spirit of cooperative federalism and consensus-building that has guided the GST Council since its inception.
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