The GST Council, which will meet here on September 9, is likely to make progress on the long-pending agenda of rate rationalisation, and review levy of GST on import of services by Indian entities from offshore branches. It may also discuss taxation of health insurance, including a proposal to cut the current 18% tax rate on the gross premium, and another one to remove such services from the ambit of the tax, sources privy to the matter said.
However, the Council may not take up the issue of contentious 28% GST levy on online gaming industry, which was supposed to be reviewed six-months post its enforcement from October, 2023. “The review is unlikely as the revenue collections due to the 28% levy (on full face value of bets) has sharply risen…by over four times,” an official said. The monthly collections – by states and the Centre – have jumped to around Rs 1,150 crore post October 1, from Rs 250 crore earlier, the person added.
The question of retrospective application of GST on e-gaming on full face value of bets, is sub judice Until October, the GST laws mandated online gaming companies to pay 18% tax on gross gaming revenue (platform fee) for “games of skill” and 28% on “games of chance” (gambling/betting). The GGR constitutes a much lower base than “full face value of bets”.
Official sources said that the Group of Ministers (GoM) is currently looking into the various aspects of rate rationalisation. This includes ascertaining whether commodities of similar nature have the same GST rates, so that there are no classification disputes. Reducing the number of slabs from four now to three is under consideration. However, upcoming 54th meeting of the Council is unlikely to take a final call on rate rationlisation.
In June, Finance Minister Nirmala Sitharaman had said after the GST Council would take up the “important agenda” of rate rationalisation at the next meeting (September 9). The re-constituted Group of Ministers, headed by Bihar deputy chief minister Samrat Choudhary, would make a detailed presentation in front of the Council on the work done so far and the unfinished agenda in the 54th meeting, Sitharaman had said.
In a post Budget interview, Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal had told FE that the possibility of a three-slab GST structure is “very much a possibility”. At present, the GST structure has four slabs – 5%, 12%, 18%, and 28%.
Moreover, the Council may clarify whether or not import of services from foreign branches by Indian firms are taxable. The issue holds significance, in the light of the latest Rs 32,400-crore notice issued by the Directorate General of GST Intelligence (DGGI) to tech giant Infosys.
On July 30, the DGGI had issued a “pre show cause” notice to Infosys stating that the company has not paid GST under “reverse-charge mechanism” (RCM) on import of services, received from its overseas branches, for the period between July 2017 and 2021-22. Infosys, however, maintains that as per regulations (CBIC June 26, 2024 circular) GST is not applicable on expenses incurred by its overseas branches.
Earlier this month, Sitharaman informed the Parliament that the health insurance premium topic has been discussed three times by the Council. She mentioned that 73-74% of collections from the levy are not “pocketed” by the Centre, but states.
Source: The Financial Express
