GST Council Meeting Set For June 22; Online Gaming Taxation Likely Under Review

GST Council Meeting: The previous GST Council meeting, which includes finance ministers from all states and UTs, took place on October 7, 2023

The GST Council, chaired by Finance Minister Nirmala Sitharaman, is set to meet on June 22 after an eight-month gap, with a significant agenda likely to include the review of the 28 per cent GST on the online gaming sector. "The 53rd meeting of the GST Council will be held on 22nd June, 2024 at New Delhi," announced the GST Council Secretariat via a post on X.

The previous GST Council meeting, which includes finance ministers from all states and Union Territories, took place on October 7, 2023. The agenda for the upcoming meeting has yet to be circulated among Council members.

This will be the first GST Council meeting following the Lok Sabha elections, whose results were declared on June 4. Nirmala Sitharaman was reappointed as a Cabinet minister in the new Modi Government on June 9.

A key item on the agenda is expected to be the review of the 28 per cent GST on the full value of bets in the online gaming sector, a policy that has been in effect since October 1, 2023. The GST Council had previously approved amendments to tax online gaming, casinos, and horse racing as taxable actionable claims, attracting a 28 per cent tax on full bet value, with a promised review after six months.

Additionally, the Council may address the issue of rate rationalisation, with a panel led by Uttar Pradesh Finance Minister Suresh Kumar Khanna tasked with suggesting necessary adjustments. This panel was established in September 2021 and submitted an interim report in June 2022. The June 22 meeting might expedite this process and set a timeline for a final report.

Deloitte India Partner Mahesh Jaising anticipates clarifications on various critical matters, such as related party transactions and ESOP taxation, reflecting policymakers' engagement with industry stakeholders.

Saurabh Agarwal, Tax Partner at EY, said, "The Council is likely to reach conclusions on matters pertaining to the Goods and Services Tax (GST) that necessitate legislative modifications, including the taxation of online gaming activities and the designation of a date for the mandatory implementation of Input Service Distributor (ISD) provisions. The larger issues with reference to relief on secondment, foreign BO - HO issue, rate rationalisation are likely to be taken up in the next GST council which will happen after June."

KPMG in India Partner and Head (Indirect Tax) Abhishek Jain noted that several clarifications are expected, including the taxability of online gaming before October, ESOPs, corporate guarantees, and various rate-related issues due to recent litigations.

Shardul Amarchand Mangaldas & Co Partner Rajat Bose said the need to address key industry issues like the taxation of online gaming and the review of valuation rules introduced in October 2023. Other topics, such as the inverted duty structure in textiles and fertilizers, may also be discussed.

Deloitte India Partner MS Mani highlighted the importance of the anticipated rate rationalisation discussion and suggested that including low-impact petroleum products like natural gas within the GST framework would benefit businesses.

The GST regime currently includes five broad tax slabs: zero, 5 per cent, 12 per cent, 18 per cent, and 28 per cent, with a cess on luxury and demerit goods above the highest rate.