GST Council to meet on June 22, tax on gaming may be reviewed

New Delhi: After an eight-month hiatus, the GST Council, led by Finance Minister Nirmala Sitharaman, is set to convene on June 22 to review the application of a 28 percent GST on the online gaming industry.

“The 53rd meeting of the GST Council is scheduled for June 22, 2024, in New Delhi,” announced the GST Council Secretariat.

The previous meeting of the GST Council, comprising finance ministers from all states and union territories, took place on October 7, 2023.

The agenda for the upcoming 53rd meeting has not yet been circulated among the Council members. This marks the first gathering of the Council following the Lok Sabha elections.

Among the anticipated discussions is a review of the decision to impose a 28 percent GST on the total value of bets for online gaming companies, which took effect on October 1, 2023.

During its meetings in July and August, the GST Council had ratified amendments to the law, incorporating online gaming, casinos, and horse racing as taxable actionable claims, clarifying that such transactions would attract a 28 percent tax on the full bet value.

It was previously stated that a review of the implementation would occur after six months, around April 2024. With no GST Council meeting convened since then, the June 22 session is expected to address the taxation of the online gaming sector.

Another pressing matter before the GST Council is rate rationalization, with a panel headed by Uttar Pradesh Finance Minister Suresh Kumar Khanna tasked with proposing necessary rate adjustments.

The June 22 meeting may see a decision to expedite this process and establish a timeline for the panel to submit its final recommendations.

The Group of Ministers (GoM) on GST rate rationalization, established in September 2021, submitted an interim report to the GST Council in June 2022, suggesting changes to tax rates for some goods and services to streamline the levy.

The GoM’s mandate includes proposing rate rationalization and rectifying inverted duty structures to simplify the rate framework, review the GST exemption list, and bolster GST revenues.

Presently, the GST system comprises five main tax slabs ranging from zero to 28 percent, with a cess imposed above the highest 28 percent rate on luxury and demerit goods.

Commenting on the upcoming meeting, Deloitte India Partner Mahesh Jaising noted that anticipated clarifications on critical matters such as related party transactions and Employee Stock Ownership Plans (ESOPs) taxation reflect policymakers’ engagement with industry stakeholders to streamline procedures.

Abhishek Jain, Partner and Head of Indirect Tax at KPMG India, mentioned that several clarifications are expected, including the taxability of the online gaming sector pre-October, ESOP tax implications, corporate guarantee taxation, and various rate-related clarifications due to recent litigations.

Rajat Bose, Partner at Shardul Amarchand Mangaldas & Co, stressed the need to address industry concerns like online gaming taxation and the promised review of valuation rules introduced in October 2023.

Moreover, discussions on inverted duty structures in textiles and fertilizers could also feature in the Council’s deliberations.

With inputs from PTI