Some progress at GST Council meet

The Goods and Services Tax (GST) Council, at its 50th meeting in Delhi last week, has taken some important, long-pending decisions. One important decision was to set up appellate tribunals for which notifications will be issued soon. Norms of appointment of members of such tribunals have been finalised and the government has given the assurance that the first few tribunals will become operational in the next six months. The states have sought 50 benches and it is likely that the tribunals will be first set up in state capitals and cities with high court benches. The establishment of tribunals will make the resolution of disputes about GST quicker and improve tax administration. At present, the disputes are settled in high courts which are otherwise weighed down by cases. The tribunals should have been set up long ago.

One other major decision was the imposition of GST on online gaming, casinos, and horse racing at 28 per cent, placing them on a par with gambling. This has invited criticism on the grounds that the Council failed to distinguish between games of skill and games of chance, and may have been guided by 'moral' considerations. Gaming is a growing industry with revenues increasing from Rs 79 billion in 2020 to Rs 119 billion in 2022, and expected to touch Rs 153 billion by 2024. The heavy taxation might set it back and lead to considerable loss of employment. It is also pointed out that if the intention was to discourage gamers, it may not be effective as they may move on to foreign platforms as it is an online business. The Council has considered the issue for a long time and a ministerial group had also reported on it. Demands persist for a review and reconsideration of this decision. 

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The Council also decided to exempt some items from taxation and reduce taxes on others. Some of the confusion about classifications have been removed. Food and beverages served in cinema halls are set to get cheaper now with the tax on them being brought down from 18 per cent to 5 per cent, equivalent to the levy charged in hotels and restaurants. Medicines for rare ailments, certain food items used for medical purposes, and specific cancer drugs have been given a welcome exemption from GST. Taxes on sports utility vehicles have gone up. The Council has made some other changes as well. Instead of tinkering with the rates in a piecemeal fashion, it could have attempted a rationalisation of the rates in view of the experience of the past six years. This will not be possible now with the elections looming on the horizon.