Online gaming companies are unlikely to get any relief from the GST Council in its meeting on Monday. Along with casinos, horse racing clubs the online gaming companies have to watch out for Tuesday as the Supreme Court is scheduled to hear a bunch of 44 petitions of online gaming companies, casinos and turf clubs related with GST demands.

Meanwhile, the Council is expected to consider many other issues including rejig of GST rates on insurance premia and cross border transactions between companies having headquarter here and branches abroad or vice versa.

The online gaming companies are agitating against 28 per cent GST along with retrospective tax notices. Last December, the Finance Ministry had informed the Rajya Sabha that 71 show cause notices involving GST to the tune of over ₹1.12-lakh crore have been issued to online gaming companies during financial years 2022-23 and 2023-24 (up to October 2023). The companies are expecting that the Council will take a call on these issues.

Although the government has maintained that 28 per cent GST rate is applicable from July 1, 2017, the issue of demand notices still went to the Fitment Committee, (comprising of tax officials from Centre and States/UTs), a part of GST Council. According to sources, the Fitment Committee is unlikely to make any recommendation. Rather, it is expected to just submit a status report.

GST Council, in its meeting dated July 11 last year, recommended that actionable claims supplied in casino, horse racing, and online gaming are leviable to a GST rate of 28 per cent and recommended to carry out amendments in the law to remove any ambiguity.  

In the 51st GST Council meeting held on August 2 last year, a few states requested that the matter be reconsidered and after detailed discussion, the GST Council decided to continue with its earlier recommendation. Later, the law was amended following which there was spurt in issuance of show cause notices.

Though the government said that amendments in the law are clarificatory in nature and it has always maintained that 28 per cent rate is applicable from July 1, 2017, online gaming companies maintained that the changes are retrospective in nature and accordingly, show cause notices have been issued.

Now, companies are expecting positive response from the Supreme Court when it will take up the Centre’s appeal on Tuesday against Karnataka High Court ruling in the matter of show cause to one online gaming company. As on date, there is interim stay on the High Court’s ruling which quashed ₹21000 crore notice.

Other items

Meanwhile, the Council is likely to deliberate on insurance (especially health insurance) premia GST. According to sources, the Fitment Committee is unlikely to give any specific recommendations for rejigging rates related with insurance premia.

Sources said the committee is likely to present four options for GST on health insurance premium: full exemption, exemption only for senior citizens, exemption for senior citizen along with policy having coverage up to ₹5 lakhs and reducing rate to 5 per cent without Input Tax Credit (ITC). Sources further said that these could result in revenue loss of ₹Rs 3,500 crore, ₹650 crore, ₹2,100 crore and ₹1,750 crore, respectively.

Pointers

On the table for GST Council

  • GST rate rejig including full exemption for health insurance and life insurance premia
  • - Clarity for GST on cross-border transactions between Indian Companies and their Foreign Branches and vice versa
  • - Status report on overall rate ratioanalisation exercise
  • - Discussion on compensation rate
  • - Clarification on GST on R&D grants to educational institutions
  • - Rate cut on cancer drugs, clarity on rates for namkeen & bhujia
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