The GST Council is expected to provide much-needed clarity on tax rates for online gaming at their next meeting, which is likely to take place in June. The council will also decide on revising the tax rates for millets and cement. The delay in the report on online gaming at the 49th meeting of the council in February was due to the Meghalaya Chief Minister, Conrad Sangma, being unable to attend due to state elections. The report focuses on the taxation of online games and whether they should be classified as games of skill or games of chance. Currently, online betting and gambling attract a 28% GST, regardless of whether the game is one of skill or chance. Other games attract an 18% levy on gross gaming revenue (GGR).
The amended Finance Act of 2023, coupled with the IT Intermediary Amendment Rules notified by the Ministry of Electronics and Information Technology, has given the online gaming industry confidence that the government will stick with an 18% GST. Stakeholders feared that applying a 28% GST on GGR would result in a significant rise in tax, with a potential impact of up to 1,100% on the business and 300% on gamers. The Finance Act of 2023 also notified the income tax on gamers, with TDS of 30% to be deducted from “net winnings” in the user account at the end of the financial year.
The proposals for revising the rates on millets and cement are also likely to be taken up at the next council meeting, and these issues are being examined by the fitment committee. With the UN declaring 2023 as the International Year of Millets, the council is expected to reduce the rate to nil from 18% for millet-based products sold in loose form and 5% in pre-packaged and labelled form. Millet should make up at least 70% of the ingredient in the products. The council could also discuss the reduction in the 28% GST rate on cement, as demanded by the industry. The high rate concerns individuals building homes, as they do not receive any tax credit for GST on cement. Developers receive credit for taxes paid on raw materials but only for under-construction properties, which helps to make taxation optimum on the sale of flats. There is no GST on completed properties, and the tax on raw materials is embedded into the property’s price. A rate cut would benefit individuals and properties that have already been constructed.
GST collections peaked in April at Rs 1.87 lakh crore, and total collections for the last fiscal year stood at Rs 18.10 lakh crore. The council meeting is likely to take place in June, as the state elections will be over by then, according to a finance ministry official. The report on online gaming is expected to be taken up, and stakeholders in the industry are hopeful that the government will stick with an 18% GST. The council will also decide on revising the rates for millets and cement, which will have a significant impact on consumers and the industry. Overall, the decisions made at the council meeting will have a significant impact on the economy and the individuals and industries affected by the tax rates.
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