GST Council decriminalises three types of offences, defers call on online gaming, horse racing and casinos

India’s GST Council deferred the decision on GST on online gaming, horse racing and casinos. The Council also increased the monetary threshold for launching prosecution for some GST offences.

“GST Council agreed to decriminalise certain offences, and the threshold of launching prosecution has been doubled to Rs 2 crore,” said Revenue Secretary Sanjay Malhotra.

Malhotra added that GST on online gaming and casinos was not discussed as the report of a Group of Ministers (GoM), chaired by Meghalaya Chief Minister Conrad Sangma, on the issue submitted its report only a couple of days back.

The Council could decide on only 8 out of the 15 agenda items due to paucity of time, Finance Minister Nirmala Sitharaman said, adding the items not considered included one pertaining to setting up of appellate tribunals for GST.
The issue of mechanism to curb tax evasion in pan masala and gutkha businesses also could not be taken up.

No new taxes have been brought, Sitharaman said on the deliberations at the GST Council’s 48th meeting.

The Council also agreed on exemptions on no claim bonus under insurance policies.

A Group of Ministers (GoM) set up by the Council to decide on GST rates on online gaming, casinos and horse racing had completed its deliberations last month and submitted its report to Finance Minister Nirmala Sitharaman.

The GoM was understood to have recommended a GST levy of 28 per cent on online gaming, irrespective of whether it is a game of skill or chance.

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The council clarified that vehicle SUVs with an engine capacity exceeding 1,500 cc and length exceeding 4,000 mm with a ground clearance of 170 mm or above will attract a 22% compensation cess.

Today’s GST Council meeting was held virtually, after a gap of about six months.

The 47th GST Council meeting held in June had directed that the Group of Ministers on Casino, Race Course and Online Gaming re-evaluate the issues in its terms of reference based on further inputs from states.

Industry players recently told PTI that the industry is fine with the government raising GST on online gaming from 18 per cent to 28 per cent but it should be levied only on gross gaming revenue (GGR) and not on contest entry amount as could hit the USD 2.2-billion sector.

The law committee had suggested raising the threshold of launching prosecution to Rs 20 crore from Rs 5 crore.

The Council also considered removing penal offences which are already covered under the Indian Penal Code (IPC) from the GST Act to make it more taxpayer friendly.

The committee had suggested that the fee for compounding offences be reduced to 25 per cent of the tax amount, from 50-150 per cent currently.

The Council today also discussed the structure of GST appellate tribunals, its composition and regional distribution. The panel is mulling if there should be one GST appellate tribunal per state or whether one per region.

A group of ministers had also proposed a “specific tax-based levy” to be linked to retail prices of items such as pan-masala and gutkha to arrest revenue leakages in these sectors at both the retailer and distributor end. Currently, these so-called sin goods carry a 28 per cent GST and an ad valorem compensation cess.

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