July 11, 2023: The 50th meeting of the Goods and Services Tax (GST) Council is scheduled to take place today in New Delhi. Presided over by union finance minister Nirmala Sitharaman, the council will discuss a range of key issues, including utility vehicle definition, tightening the norms for registering and claiming input tax credit (ITC), taxation of online gaming and the GST Appellate Tribunal.
During the meeting, the Council is also likely to clarify on the GST rates applicable on food and beverages sold in multiplexes, exempt GST on import of cancer drug Dinutuximab and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases. Additionally, it may address the demand of the industry for reimbursement of full CGST and 50% IGST in 11 hill states under the ‘scheme for budgetary support’.
The GST Council plays a crucial role in making important decisions regarding the Goods and Services Tax (GST) in India. These decisions cover various aspects such as tax rates, exemptions, thresholds and administrative procedures. Consensus is the guiding principle, with each decision requiring a majority of at least three-fourths of the weighted votes of the members present and voting. The Centre holds one-third of the total votes while states hold two-thirds.
List of things that may be discussed in the GST Council meeting
Some of the issues that are likely to be discussed in today’s GST Council meeting include:
Food and beverages in cinema halls
The fitment committee has recommended to the GST Council to clarify that food and beverages served in cinema halls should be taxed at 5% instead of the higher rate of 18% that some multiplexes were charging. However, if the sale of cinema tickets and food items like popcorn or cold drinks are bundled together and sold as a package, it should be considered a composite supply and taxed based on the applicable rate for the principal supply, which in this case is the cinema ticket. Tickets below Rs 100 are taxed at 12%, while those above the threshold attract an 18% GST.
Mandatory physical verification
The GST Council is considering implementing mandatory physical verification of the business premises for ‘high-risk’ applicants before granting GST registration. Additionally, there may be a reduced timeframe for submitting Pan-linked bank account details to the GST authorities. These measures aim to strengthen the registration process and ensure compliance with GST regulations.
Taxation of horse racing, online gaming and casinos
The panel of eight state finance ministers, led by Meghalaya chief minister Conrad Sangma, has prepared a report on the taxation of online gaming, casinos and horse racing. The group of ministers (GoM) has proposed a 28% GST on all three supplies. However, there is a disagreement on the taxability of online games, with Goa suggesting an 18% tax only on platform fees, exempting contribution to the prize pool. In today’s meeting, the GST Council will make the final decision on the taxation rate and the applicable tax base for online gaming, casinos and horse racing.
Reasons for excess input tax credit (ITC)
A new rule in the GST law, which requires businesses to provide explanations for excessive ITC claims or depositing the excess amount with the exchequer, is expected to be discussed. The Law Committee, consisting of tax officers from the Centre and states, has proposed that if the ITC claimed in the GSTR-3B return exceeds the amount available in the auto-generated statement GSTR-2B by a specified threshold, the registered person will be notified on the portal. They will be directed to either explain the difference or pay the excess ITC with interest. The committee suggests that this provision should apply if the difference exceeds 20% and Rs 25 lakh. The GST Council will make the final decision on this recommendation in its 50th meeting.
Taxation of multi-utility vehicles
There is an expectation for clarification on the taxation of Multi Utility Vehicles (MUV), multipurpose vehicles, or Crossover Utility Vehicles (XUVs) regarding the levy of a 22% compensation cess in addition to the 28% GST. The fitment committee, consisting of tax officials from both the central and state governments, has recommended that all utility vehicles, regardless of their name, will attract a 22% cess if they meet three criteria: length greater than 4 metre, engine capacity greater than 1,500 cc and ground clearance in ‘un-laden condition’ of more than 170 mm.
Taxation of medicine
There is a possibility of a tax cut on medicines. The fitment committee has suggested that medicines costing Rs 36 lakh should be exempted from GST, considering that patients often rely on crowdfunding to raise funds for them. Additionally, the committee has recommended lowering the GST rates on unfried snack pellets from 18% to 5%. Furthermore, it has proposed an exemption from the 12% Integrated GST (IGST) for individuals who import cancer medicine (dinutuximab/qarziba) for personal use.
TCS liability of suppliers on ONDC
Among other things, the GST Council is also likely to decide on TCS liability of suppliers engaged in e-commerce trading through the government’s Open Network for Digital Commerce (ONDC).
During the 49th meeting, the Council gave its initial approval for the establishment of the National Bench of the Goods and Services Tax Appellate Tribunal (GSTAT). The National Bench will be located in New Delhi and will be headed by a President. It will also include one Technical Member (Centre) and one Technical Member (State).
