The GST Council is set to hold its 47th meeting in Chandigarh at 11:00 AM tomorrow. The two-day meeting is likely to focus on a number of issues including withdrawing GST exemption on a slew of items, levying 28 percent GST on casinos, race courses, online gaming, and lottery.

It will also consider a report of the panel of state ministers on making e-way bill mandatory for intra-state movement of gold/ precious stones worth Rs 2 lakh and above and e-invoicing mandatory for all taxpayers supplying gold/precious stones and having annual aggregate turnover above Rs 20 crore.

Besides, an interim report of a group of ministers on rate rationalisation, which is likely to suggest correcting the inverted duty structure and removing some items from exempted list, would also be taken up for consideration.

Earlier, the GST Council had appointed a Group of Ministers (GoM) for online gaming, casinos, and race tracks, taking into account the concerns of both the government and industry. The GoM concluded its final meeting on May 18, 2022, and submitted the recommendations to the GST Council.

Sources have told CNBC-TV18 that the GoM unanimously has recommended the GST rate hike from 18 percent to 28 percent on casinos, race courses, online gaming, and lottery. They have also recommended that there should not be any distinction between a game of chance and the game of skill. Both should be kept at par.

Speaking to CNBC-TV18, MS Mani, Partner at Deloitte India said since GST is on the cusp of five years, it is a good time to review the exemption list. He added that it makes sense to relook at the exemptions every two years or so.

"The exemption list has come a long way in the last five years or so. An exemption list even in other countries and other geographies of the world are reviewed typically every 3-4 years. Since we are at the cusp of five years, I think it is a good time to review the exemption list. Some of the exemptions that are there today may have run the course," Mani said.

"In our country, once we have something which is exempted, if there is a provision to tax that it creates a furor. So some of the exemptions may be pruned. But we will have to wait and watch for the list that comes out. If these products no longer require an exemption and that helps to broaden the tax base, it helps in getting more people into the whole GST system as a whole then, I think it makes sense to relook at the exemptions maybe every two years or so," he added.

According to Abhishek Rastogi, Partner at Khaitan & Co, any extension in compensation cess beyond a period will be harsh for the industry. He said given the pandemic and economic conditions any burden on the industry will create heavy losses for several sectors.

"Compensation cess was initially agreed through a constitutional amendment and other provisions to be levied for five years. Anything over and above a particular rate or beyond a period will be completely harsh for the industry. So in such circumstances extending it beyond reasonable time or extending it beyond the expected rate is not a good sign at all," he said.

Rastogi said some judicial intervention might be required in online gaming taxation as an actionable claim needs to be determined.

"I think there will be some judicial intervention which will be required. When these online gaming companies were raided, we had taken such issues to the court very clearly putting the point across that coercive recoveries cannot happen at this stage when GoM has to come out with complete details. Of course, there are certain aspects with respect to valuations," he e said.

Rastogi added that Article 14 of the constitution also comes into play as it is harsh for online gaming companies to be treated at par with casinos.

"Article 14 of the constitution comes into play because it is not just simply a game of skill versus a game of chance, Article 14 for discrimination will come into play because that is an important aspect and it will be very harsh for online gaming companies to be treated at par with casinos, etc. So Article 14 also comes into play from the perspective of whether it is a game of skill or game of chance," he added.

Anwar Shirpurwala, CEO of the Federation of Indian Fantasy Sports (FIFS) said, "We are not able to understand why online gaming is being clubbed with betting and gambling. Legally, there is a clear demarcation between online gaming and betting and gambling."

"We have been making representations to the government for a very long time now and we have explained the entire system, the mechanism by which the entire online gaming works. So if both are placed in the same bucket, I think it is going to have an adverse effect to the industry and to the users as the grey market will proliferate," he said.

Watch the video for more.

First Published:Jun 27, 2022 8:37 PM IST