In a significant development aimed at fostering cooperative federalism and enhancing the simplicity of India’s tax regime, Finance Minister Nirmala Sitharaman chaired the 50th GST Council meeting in New Delhi on 11th July 2023. The meeting witnessed the presence of esteemed dignitaries, including MoS (F) Pankaj Chaudhary, Revenue Secretary Sanjay Malhotra, Chairman CBIC Vivek Johri, Member GST, and Member Tax Policy, CBIC, among others. With the objective of addressing critical areas and streamlining the GST framework, several key decisions were taken during the meeting.
Some of the major ones are here:
1-One of the major highlights of council’s decisions is that cancer-related and rare diseases related drugs, medical purpose foods are exempted from GST Tax. This move aims to alleviate the financial burden on patients battling life-threatening illnesses and ensure the availability of essential treatments at affordable prices.
2-Recognising the need to reduce the tax burden on specific items, the council approved a GST rate reduction on four products. Uncooked, unfried, and extruded snack palettes, fish-soluble paste, LD slag, and imitation zari thread will now be subject to lower GST rates, ranging from 5% to 18%. Additionally, the GST rate on food served in cinema halls has been significantly reduced from 18% to 5%, providing relief to moviegoers.
3-In a significant decision aimed at addressing the burgeoning online gaming industry, the council abolished the distinction between games of skill and chance, imposing a uniform 28% GST rate on online gaming, casinos, and horse racing. This decision has sparked mixed reactions from stakeholders, with some expressing disappointment over the high tax rate, citing potential challenges for the Indian gaming industry. Experts believe that further clarification is required to understand if any exceptions will be made and anticipate the possibility of litigation arising from this development.
4-Addressing concerns regarding the gathering of information on the GST network, Revenue Secretary Sanjay Malhotra clarified that the recent finance ministry notification empowers tax authorities by providing them with additional information. Emphasising the role of the GSTN as a recipient of information, the clarification aims to enhance transparency and strengthen governance in the tax ecosystem.
5-The council’s commitment to effective governance and institutional frameworks was reflected in its recommendation of rules governing the appointment and conditions of the proposed GST Appellate Tribunal. This move seeks to facilitate the smooth constitution and functioning of the tribunal, ensuring a fair and efficient dispute resolution mechanism for GST-related matters.
6-Furthermore, the council expanded the list of specified banks eligible for IGST exemption on imports of gold, silver, or platinum, including RBL Bank and ICBC Bank. By updating the list of eligible entities, the council aims to support the jewellery and precious metals industry and promote ease of doing business.
7-To streamline the levy of Compensation Cess on products like pan masala and tobacco, the council decided to notify the earlier ad valorem rate applicable on March 31, 2023, where It would not be mandatory to disclose retail sale price. This decision provides clarity and ensures consistency in the levy of Compensation Cess on these goods.
8-The 50th meeting of the GST council marked a significant milestone in India’s journey towards cooperative federalism and the establishment of a robust tax regime. With the cumulative outcome of 49 previous meetings and approximately 1500 decisions, the council continues to prioritise collaboration between the central and state governments to strengthen the nation’s fiscal ecosystem.
