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Business News›News›Economy›Policy›GST Council Meet: 28% GST on online gaming;
SUV, MPVs' price hikes & other key decisions



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GST COUNCIL MEET: 28% GST ON ONLINE GAMING; SUV, MPVS' PRICE HIKES & OTHER KEY
DECISIONS

SECTIONS
GST Council Meet: 28% GST on online gaming; SUV, MPVs' price hikes & other key
decisions
ET OnlineLast Updated: Jul 12, 2023, 08:51 AM IST

STORY OUTLINE

 * 28 per cent GST on online gaming, horse racing, and casinos on full value
 * GST on restaurants inside Cineplex to attract 5 per cent GST
 * MUV to attract 22 per cent cess rate, sedans not a part of it
 * GST exempted for cancer drug and food for special medical purposes

GST Council Meet key takeaways: 28% GST on online gaming; food at Cinemas to get
cheaper and more
The Goods and Services Tax Council, after its 50th meet in New Delhi on Tuesday,
has agreed to levy 28 per cent GST on online gaming, horse racing, casinos on
full value.

GST council agreed that there should be no distinction between 'game of skill
and game of chance.'



While the Group of Ministers (GoM) in their previous meeting broadly agreed for
the proposed taxes on the said activities, there was no consensus on online
gaming as Goa proposed to impose only 18 per cent tax on platform fees.




"GST of 28 % on the full value of bets on online gaming, horse racing and casino
will be a major damper to the gaming industry. The online gaming companies will
be hit in a big way," said Parag Mehta, Partner, N.A. Shah Associates said.


You Might Also Like:

Prices of SUVs and MPVs to go up 2% following the GST cess increase


Also Read: Game over: Indian gaming companies fear thousand job cuts after GST
rise

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The recent announcement by the GST council made will not only hamper online
gaming platforms' capacity to develop new games and technologies but will also
undermine their competitiveness in the market, said Aaditya Shah, COO,
IndiaPlays.




A group of top online gaming firms represented by the FICCI Gaming Committee had
earlier urged the Central Board of Indirect Taxes & Customs (CBIC) not to hike
the GST rate for the sector to 28 per cent as they cited it would be “extremely
detrimental to the survival of the online gaming industry as no business
operations can survive with such high taxation.”

"Now, it is also almost certain that the (gaming) industry will be challenging
these amendments to the GST laws, as and when they are brought into force in the
courts on constitutional grounds. The industry will also likely be seeking
interim relief from courts as and when the law is brought into force," said Jay
Sayta, Technology & Gaming Lawyer.

You Might Also Like:

Game over: Indian gaming companies fear thousands of job cuts after GST increase



Tax on F&B in Cinema Halls
The council announced that GST on restaurants inside Cineplex will attract 5 per
cent GST against 18 per cent earlier.

"It has been decided to clarify that supply of food and beverages in cinema
halls is taxable as restaurant service as long as (a) they are supplied by way
of or as part of a service and (b) supplied independently of the cinema
exhibition service," according to a finance ministry statement.

The council also shed light on the sale of cinema tickets and supply of eatables
such as popcorn or cold drinks etc., when clubbed and sold together, the entire
supply should be treated as composite supply and taxed as per the applicable
rate of the principal supply, which in this case is cinema ticket.

"In the last two years, various state governments or local bodies were lobbying
to apply different GST rates on different food items in cinema halls (different
for popcorn, ice cream etc) and this move will eliminate disparities and provide
clarity by ensuring that all food products are subject to a 5% GST rate," said
Karan Taurani, Senior Vice President - Research Analyst (Media, Consumer
Discretionary & Internet), Elara Securities.

He said this is a positive news since it will save time and effort for the
exhibitors in fighting the litigations against the states.


Along with this, other products which will see a reduction in GST are uncooked
food palette, fish and soluble paste where the tax is 5 per cent from 18 per
cent which was charged earlier.

"The concession rate on food and beverage sold at cinema halls has been approved
and would now be taxable at 5% instead of 18% making cinema halls at par with
restaurants. While the packaged drinks and foods are already being sold at an
inflated rate will have to see how much customers will save with this
concession," said Ankur Gupta, Practice Leader, Indirect Tax at SW India.

Council on Taxation on MUV

Owning a large utility vehicle which includes an SUV and an MPV (multi-purpose
vehicle) will become more expensive. Prices of UVs, those above four meters, are
likely to go up by 2 per cent with the GST Council increasing the cess by 200
basis points from the current 20 per cent to 22 per cent.

The GST Council decided on the definition of utility vehicles and tightened
norms for registration. A clarity on taxation of Multi Utility Vehicles (MUV)
was also provided.

The Council has agreed to the recommendation to increase the compensation cess
to 22 per cent from 20 per cent earlier on MUVs (over and above 28% GST), but
Sedan has not been included in the list.

The Finance Minister said two states, Punjab and Tamil Nadu were against sedans
being included in the list which will see a rise in GST being taxed.

The condition popularly known as SUV has also been removed. This would mean all
bigger SUV/MPV which are attracting 20 per cent cess rate so far will have cess
rate of 22 per cent.

The higher cess on UVs come amid a scorching pace of growth UVs have seen since
the last three years.

Council to set up appellate tribunal
Finance Minister has said that many states during the meet have requested for
benches. She added that no request will be denied.

Council to exempt GST on cancer drug
Further, the meeting also decided to exempt GST on import of cancer drug
Dinutuximab, and Food for Special Medical Purposes (FSMP) used in the treatment
of rare diseases. Currently, the drug attracts a 12% integrated GST.

"The GST Council’s decision to reduce tax rates and provide exemptions on
specified products is a welcome move. Concerning cancer-related / rare disease
medicine the cost of medicine is too huge and such an exemption will surely help
the public at large. There were specific exemptions provided in a couple of
cases but with this amendment, the upfront exemption will be applicable," said
Gupta






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( Originally published on Jul 11, 2023 )
In Video: GST Council Meet key takeaways: 28% GST on online gaming; food at
Cinemas to get cheaper and more





READ MORE NEWS ON

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