Are there any tax changes for Goods and Services?Business News

June 22, 2024 19:26
Are there any tax changes for Goods and Services?

The 53rd meeting of the Goods and Services Tax (GST) Board chaired by Finance Minister Nirmala Sitharaman will be held in New Delhi on Saturday. This conference will discuss several important issues affecting various sectors. A specific agenda for the meeting has yet to be announced, but the board is expected to address important issues that have been pending for several months. This is the first meeting of the GST Council in eight months after its 52nd meeting on October 7, 2023, when a 28% tax on online gambling, casinos and horse racing was decided. The tax review was originally scheduled for April 2024 but was postponed at the March meeting. One of the key expectations of today's meeting is the review of the 28% GST on full par value of shares by online gaming companies.

Last year, the council approved changes to the GST law that included online gambling, casinos and horse racing as taxable entities. The review was originally scheduled for April 2024, but has not yet been implemented. The online gaming industry is currently facing a tax liability of around Rs 2 billion, which is being challenged in court. The Supreme Court is scheduled to hear her appeal in July. Following the council's decision, more than 70 notices have been issued against online gaming companies for alleged GST evasion of over Rs 112 crore in financial years 2022-23 and 2023-24. Experts believe that the GST Council has two options. They can either refuse the adjustment while the matter is pending or they can change their decision by removing the retroactive application of the 28% GST. Ranjeet Mahtani, partner at Dhruva Advisors, suggested that the GST Council may look at several issues today, including review of tariff structure and rationalization of tariffs. He said the board may also explain the newly introduced GST on corporate guarantees. The GST Council is also expected to discuss the recommendations of the Standing Committee on Chemical Fertilizers to reduce GST on nutrients and raw materials to help fertilizer manufacturers and farmers in February.

Currently, fertilizers are subject to 5% GST while raw materials such as sulfuric acid and ammonia are subject to 18% GST. Previous discussions to reduce these rates were held at the 45th and 47th GST Council meetings in September 2021 and June 2022, but no changes were recommended. Proposals to include fuel in the GST framework continue to ensure uniform pricing for essential energy sources. But some states oppose the idea because of concerns about the potential loss of fuel tax revenue. Inclusion of petrol in the GST system, which has the highest rate at 28%, could lead to a significant reduction in prices. Currently, petroleum products are subject to excise tax and value added tax (VAT) at the state level, resulting in price differences between states and higher retail prices. According to a report in Economic Times, the government is facing a profit of Rs 70,000 crore due to the drastic suspension of GST compensation even after repaying loans taken by states during the COVID-19 period.

Additional duties will be levied on items deemed to be “sin goods” such as pan masala, tobacco, aerated drinks and cars, which are currently subject to a GST rate of up to 28%. "Given the recovery, we will be able to repay all loans (and around Rs 65,000-70,000 crore) before the March 2026 deadline," said a senior official quoted in the ET report. The Center is yet to decide how to spend this excess tax, officials expect the matter to come up at the GST board meeting on Saturday when discussions on rate rationalization will begin. The report also suggests that the GST Council may set a deadline for the Group of Ministers (GoM). The government was formed twice last year and is now headed by the Deputy Chief Minister of Bihar. The council is also expected to amend the GST law. It will review the decisions taken at its last meeting in October last year. Ultra-neutral alcohol (ENA) used for human consumption will be exempted from tax and subject to VAT, while ENA for industrial use will be taxed at 18%.

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