The Goods and Services Tax (GST) Council decided to impose the top 28% slab on online gaming, horse racing, and casinos. This move is aimed at bringing uniformity in the taxation of these sectors. Additionally, changes have been made to the taxation of multi utility and sports utility vehicles. All large cars, regardless of their classification, will attract a 22% cess on top of the 28% GST if they meet certain criteria. Cancer drugs and medicines for rare diseases, as well as satellite launch services provided by private operators, have been exempted from the levy.
In a bid to boost the entertainment sector, the Council has reduced the service tax levied on food and beverages consumed in cinema halls to 5% from the previous 18%. However, the decision to impose the 28% GST on online gaming, horse racing, and casinos has raised concerns among industry experts.
The industry believes that this decision will have a negative impact on foreign direct investment (FDI) in the sector, as investors may be discouraged by the high taxation rate. These companies argue that the higher tax will push users towards illegal betting platforms, leading to a loss of revenue for the government. They have requested the GST Council and the government to reconsider this decision.
The government, on the other hand, believes that gaming and gambling cannot be taxed at a lower rate than essential goods. They argue that promoting online gaming more than essential industries raises moral questions. The government also plans to introduce an amendment in the GST law to include online gaming as a taxable activity.
In response to legal challenges against the 28% tax on online gaming, revenue secretary Sanjay Malhotra stated that the tax was always applicable to this sector. The decision by the Council was meant to clarify any confusion and put an end to the debate.
Apart from the decisions related to online gaming, horse racing, and casinos, the Council has also approved various measures to curb fake GST registrations. They have mandated valid bank account details for GST registration and made physical verification mandatory for high-risk registrations. These steps aim to prevent fake registrations and ensure the integrity of the GST system.
In addition, the Council has decided to set up GST tribunals across the country to handle disputes related to GST. About 50 tribunals will be established, with the goal of starting operations within the next four to six months.
Overall, the decisions made by the GST Council regarding the taxation of online gaming, horse racing, and casinos are expected to have a significant impact on these industries. The industry will closely monitor the implementation of these changes and the potential consequences for FDI and user behavior.
