GST update :- In a packed meeting, the 50th held by the influential GST Council, several important decisions were made. These included reducing the GST on food and beverages served in movie halls and multiplexes from 18% to 5%, providing clarity on the definition of sports utility vehicles (SUVs), granting exemptions for certain pharmaceutical products used in the treatment of cancer and rare diseases, exempting GST on satellite launch services by private companies, and initiating the establishment of GST Appellate Tribunals in state capitals and cities with high court benches.

During the meeting, several opposition states sought clarity on bringing the GST Network under the Prevention of Money Laundering Act and requested the expansion or extension of compensation to states.

Finance Minister Nirmala Sitharaman confirmed that the GST Act would be amended to include online gaming and horse racing. The discussion revolved around the taxation aspect, focusing on wagers placed and profits made, rather than the distinction between games of skill and games of chance.

Experts expressed concerns that the decision, based on recommendations from a Group of Ministers, could have detrimental effects on the online gaming industry. They highlighted that levying a 28% tax rate would be a significant setback for Indian players and disadvantageous for domestic game companies compared to international standards.

The CEO of The All India Gaming Federation criticized the decision, calling it unconstitutional and detrimental to the gaming industry, leading to job losses and benefiting illegal offshore platforms.

Regarding SUVs, the council decided that vehicles with a length of at least four meters, engine capacity exceeding 1500cc, and ground clearance of 170mm or more (unloaded) would be taxed at 28% plus a compensation levy. The requirement for the vehicle to be popularly known as an SUV was dropped, and the tax rate would apply to any personal utility vehicle meeting the specified conditions.

The council also announced exemptions from GST on medicines and food for Special Medical Purposes used in the treatment of rare diseases, imported for personal use, or utilized by Centres of Excellence for Rare Diseases or the government. Additionally, the exemption on satellite launch services supplied by ISRO, Antrix Corporation, and New Space India Limited may be extended to services provided by private sector organizations to encourage startups.

In terms of GST Appellate Tribunals, requests were made for 50 benches from various states. The council agreed to fulfil these requests but acknowledged that the hiring process for personnel would take time. Therefore, tribunals would be initially set up in state capitals and cities with high courts, with operations expected to commence in the next 4-6 months.

Some states, such as Delhi, Punjab, and West Bengal, opposed the recent move to bring GSTN under the Prevention of Money Laundering Act, fearing potential trouble from the Enforcement Directorate for honest small and medium businesses. The finance minister and the Revenue Secretary clarified that the move was in line with the requirements of the Financial Action Task Force, aiming to empower authorities with more information. The Financial Intelligence Unit would determine the information to be shared.

Regarding revenue growth concerns, Kerala and Chhattisgarh urged the council to consider expanding compensation. However, it remains unclear whether this matter will be addressed in future meetings.

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