Gaming, cement GST clarity likely at Council meeting in June

The much-awaited clarity on online gaming tax rates is expected at the next meeting of the GST Council, which is likely next month.

The council is also set to decide on revising the rates for millets and cement at the meeting.

A council meeting in June is likely as by then the state elections will be over, a finance ministry official said.

“We expect the next meeting of the GST Council would take up the report of the Group of Ministers on online gaming, horse racing and casinos and hopefully it would be approved,” the official said.

The report was not taken up at the 49th meeting of the council in February as the chair of GoM, Meghalaya chief minister Conrad Sangma, could not attend because of the elections in the state.

There is no consensus on how to tax online games and whether to consider them as games of skill or games of chance.

At present, online betting and gambling attract 28 per cent GST, irrespective of whether it is a game of skill and chance, while other games attract an 18 per cent levy on gross gaming revenue (GGR).

The amended Finance Act of 2023, followed by the IT Intermediary Amendment Rules notified by the Ministry of Electronics and information technology, has given the online gaming industry the confidence that the government will stick with 18 per cent GST.

Stakeholders were worried that applying 28 per cent GST on GGR would lead to a significant rise in tax with an impact as high as 1,100 per cent on the business and 300 per cent on gamers.

The income tax on gamers has been separately notified in Finance Act 2023 — TDS of 30 per cent to be deducted from “net winnings” in the user account at the end of the financial year.

The finance ministry official said the proposals for the revision of rates on millets and cement are also likely to be taken up at the next council meeting, and these issues are being looked into by the fitment committee.

With the UN declaring 2023 as the International Year of Millets, the council is expected to reduce the rate to nil from 18 per cent for millet-based products sold in loose form and 5 per cent in pre-packaged and labelled form. Millet should make for at least 70 per cent of the ingredient in the products.

The council could discuss the reduction in 28 per cent GST rate on cement as demanded by the industry. The high rate concerns individuals building homes as they do not get any tax credit for GST on cement.

Developers do get the credit but only for under-construction properties. They get the credit for the taxes paid on raw materials, which helps to make taxation optimum on the sale of flats.

There is no GST on completed properties; the tax on raw materials gets embedded into the property’s price.

A rate cut will benefit the individuals and the properties that have been constructed.

GST collections peaked in April at Rs 1.87 lakh crore. Total collections in the last fiscal stood at Rs 18.10 lakh crore.