In a meeting after nearly five months, the Goods and Services Tax (GST) Council on Tuesday resolved some complex issues that were pending for a long time, such as setting up of appellate tribunals and tax treatment for the booming online gaming industry. With the appointment norms for tribunal members cleared, the Center has assured that the first set of tribunals should be operational in four to six months. While states have proposed 50 tribunal benches, these will come up in a phased manner, starting with state capitals and cities having high court benches. Industry can look forward to early resolution of the mounting GST litigations clogging the courts. On the other hand, businesses have reacted with great trepidation to the finalization of the council’s decision. 28% GST levy on face value of all bets Placed among online games, casinos or horse racing, many e-gaming players termed it as the death knell for the growing industry and its thousands of jobs. This was not a decision taken in haste, a ministerial group of the Council had considered it not once, but twice since its formation in late 2020. Finance Minister Nirmala Sitharaman said the council recognized that Goa and Sikkim depend heavily on casino-driven tourism revenue. But it also examined the ethical question of whether it could be equated to the more compassionate tax treatment required of essential goods and services. The Ministry of Electronics and IT is also formulating a policy for online gaming, the decision requiring amendment to the GST law may require some review and correction.
The Council also granted tax exemptions, reduced or clarified certain rates and regularized past anomalies in tax payment on certain items due to confusion about their classification. Therefore, food and beverages in cinema halls will now attract a lower GST of 5%, such as unfried, uncooked snack pellets, fish soluble paste and imitation zari yarn. It is not clear why the council took six years to revise these rates after the introduction of the GST regime. For example, exempting imported drugs for cancer and some rare diseases could have been envisaged earlier, as had been the intention to impose higher taxes on sport utility vehicles. For a country where traffic congestion is intense and widespread, curbing the use of large private vehicles is an obvious necessity. The impact of some decisions on individual sectors will depend on the fine print, but the Council, which may meet less frequently in the upcoming election season, has averted its eyes on the promise of GST rates. No successor was named to head the ministerial group on rate restructuring, which was earlier headed by former Karnataka chief minister BS Bommai.