The Finance Ministry is holding the 53rd GST Council Meeting in New Delhi today, June 22. Finance Minister Nirmala Sitharaman will lead the session.
Although the specific agenda hasn’t been revealed, the Council will likely discuss several important topics.
This is the first GST Council meeting in eight months, following the last one on October 7, 2023, where a 28% tax on online gaming, casinos, and horse racing was introduced.
The review of this tax, originally set for April 2024, was delayed in the March meeting. Here are some key expectations for today’s meeting.
GST Council Meeting
The Goods and Services Tax (GST) Council is meeting in the capital after more than eight months to discuss important indirect tax issues, including ways to improve and secure the tax system.
In these meetings, the GST Council reviews trends in tax revenue collection, considers proposals from central and state officials for changes in the law and tax rates, and approves urgent decisions made since the last meeting. Here’s what to expect at today’s session.
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Review of Online Gaming Tax
The government is expected to review the 28% GST on the total face value of bets placed by online gaming companies.
Last year, amendments to GST laws included online gaming, casinos, and horse racing as taxable actionable claims. The review of this tax, originally scheduled for April 2024, has not yet taken place. The online gaming industry is contesting a tax liability of about Rs 2 lakh crore in court, with the Supreme Court set to hear their appeals in July.
Following the Council’s decision, over 70 show-cause notices have been issued to online gaming companies for alleged GST evasion totaling over Rs 1.12 lakh crore during the 2022-23 and 2023-24 financial years.
Experts suggest the GST Council has two options: either to make no changes while the issue is under litigation or to correct the decision by removing the retroactive application of the 28% GST.
Ranjeet Mahtani, Partner at Dhruva Advisors, told Business Today that the GST Council is “expected to address multiple issues like rate structure overhauling, rate rationalization, concerns about the inverted duty structure, and clarifications on the newly introduced GST on corporate guarantees.”
GST Reduction on Chemicals and Fertilisers
The Council is likely to discuss recommendations from the Standing Committee on Chemicals and Fertilisers made in February, proposing a reduction in GST on nutrients and raw materials to benefit fertiliser manufacturers and farmers.
Currently, fertilisers are taxed at a 5% GST rate, while raw materials like sulphuric acid and ammonia are taxed at 18%. Previous discussions on reducing these rates took place during the 45th and 47th GST Council meetings in September 2021 and June 2022, but no changes were implemented.
Discussions to Bring Fuel Under GST
There have been ongoing proposals to include fuel within the GST framework to ensure consistent pricing for essential energy resources.
However, some states oppose this idea due to concerns over potential revenue loss from fuel taxes. Integrating petrol into the GST system, where the highest tax rate is 28%, could lead to significant price reductions.
Currently, petroleum products are subject to central excise duties and state-level value-added taxes (VAT), leading to price disparities across states and higher retail prices.
Shivam Mehta, Executive Partner at Lakshmikumaran & Sridharan Attorneys, noted that recent discussions about including petrol, diesel, ATF, natural gas, and selected petroleum products under GST have been taking place both within government circles and the industry. However, the success of these proposals will depend on the Centre’s ability to address state concerns.
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GST Council Meeting FAQs
Q.1. What is the purpose of the 53rd GST Council Meeting?
Ans. The 53rd GST Council Meeting aims to discuss key issues such as online gaming tax, GST reduction on chemicals and fertilizers, and the potential inclusion of fuel under GST.
Q.2. What is expected regarding the online gaming tax?
Ans. The government is expected to review the 28% GST on online gaming bets, with the industry contesting a significant tax liability in court.
Q.3. Will there be a reduction in GST on chemicals and fertilizers?
Ans. The Council may discuss reducing GST on nutrients and raw materials, benefiting fertilizer manufacturers and farmers, following recommendations from the Standing Committee on Chemicals and Fertilisers.
Q.4. Are there plans to include fuel under the GST framework?
Ans. Ongoing discussions propose including petrol, diesel, and other fuels under GST to ensure consistent pricing, though some states are concerned about potential revenue loss.
Q.5. When was the last GST Council meeting held?
Ans. The last GST Council meeting was held on October 7, 2023, where a 28% tax on online gaming, casinos, and horse racing was introduced.
