The Gst Council should review the list of exemptions every 2 years: Deloitte India

The GST Council is due to hold its 47th meeting in Chandigarh at 11:00 a.m. tomorrow. The two-day meeting is expected to focus on a number of issues, including the removal of the GST exemption on a host of items, the collection of the 28% GST on casinos, racetracks, online gambling online and the lottery.

It will also consider a report by the group of State Ministers on the requirement of electronic invoicing for intra-state movement of gold/precious stones worth Rs 2 lakh and above and compulsory electronic invoicing for all taxpayers supplying gold/precious stones and having annual aggregate turnover above Rs 20 crore.

In addition, an interim report from a group of ministers on rate rationalization, which would likely suggest correcting the inverted duty structure and removing certain items from the exempt list, would also be considered.

Earlier, the GST Council had appointed a Group of Ministers (GoM) for Online Gaming, Casinos and Racetracks, taking into account government and industry concerns. The GoM concluded its final meeting on May 18, 2022 and submitted the recommendations to the GST Board.

Sources said CNBC-TV18 that the GoM unanimously recommended raising the GST rate from 18% to 28% on casinos, racetracks, online gambling and lotteries. They also recommended that there be no distinction between a game of chance and a game of skill. Both must be kept at par.

Talk to CNBC-TV18, MS Mani, Partner at Deloitte India, said that the GST is about to be five years old, now is the right time to review the list of exemptions. He added that it makes sense to review the exemptions every two years or so.

“The exemption list has come a long way in the last five years or so. An exemption list, even in other countries and other parts of the world, is usually revised every 3-4 years. Since we are on the cusp of five years, I think it is a good time to review the list of exemptions, some of the exemptions that exist today may have run their course,” Mani said.

“In our country, once we have something that is exempt, if there is a disposition to tax, it creates an uproar. So some of the exemptions can be pruned. But we will have to wait and watch the list that comes out. If these products no longer require exemption and it helps to broaden the tax base, it helps attract more people into the whole GST system as a whole, I think it makes sense to revisit exemptions maybe every two years or so,” he added.

According to Abhishek Rastogi, a partner at Khaitan & Co, any extension of compensation beyond a period will be tough on the industry. He said that given the pandemic and the economic conditions, any burden on the industry will lead to heavy losses for several sectors.

“The cessation of compensation was originally agreed through a constitutional amendment and other provisions to be levied for five years. Anything above a particular rate or beyond a period will be completely hard on the ‘industry. So in such circumstances, extending it beyond a reasonable time or extending beyond the expected rate is not a good sign at all,” he said.

Rastogi said legal intervention may be needed in the taxation of online gambling as an actionable claim needs to be determined.

“I think there will be legal intervention that will be necessary. When these online gambling companies were raided, we had taken these issues to court making it very clear that coercive collections cannot occur at this stage. when the GoM has to come out with full details. Of course there are certain aspects when it comes to assessments,” he said.

Rastogi added that Article 14 of the constitution also comes into play as it is difficult for online gambling companies to be treated on equal footing with casinos.

“Article 14 of the constitution comes into play because it’s not just a game of skill versus a game of chance, article 14 for discrimination will come into play because that’s an important aspect and it will be very hard for online gaming companies to be treated equally with casinos etc. So article 14 also comes into play from the point of view of whether it is a game of skill or a game of chance,” he added.

Anwar Shirpurwala, CEO of Fantasy Sports Federation of India (FIFS), said: “We are unable to understand why online games are associated with betting and gambling. Legally, there is a clear demarcation between online games and betting and gambling.”

“We’ve been making representations to the government for a very long time now and we’ve explained the whole system, the mechanism by which the whole online game works. So if the two are put in the same bucket, I think it’s going to have a negative effect on the industry and users as the gray market will proliferate,” he said.

Watch the video to learn more.

First post: STI

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