At its upcoming meeting on Saturday, the GST Council is set to cover a range of topics, among which the taxation on online gaming and a recommendation by the Parliamentary standing committee to reduce the tax on fertilizers, based on information from insiders, are anticipated to be key discussion points. The Council, under the leadership of Union Finance Minister Nirmala Sitharaman and her state counterparts, will convene for its 53rd session. This session is also expected to discuss the progress made by the Group of Ministers (GoM) on the report concerning Goods and Services Tax (GST) rate rationalization and updates to GST legislation following previous Council resolutions.
In particular, the Council might deliberate on suggestions from the Standing Committee on Chemicals and Fertilizers made back in February, which advocated for lowering the GST on nutrients and basic materials, benefiting both fertilizer companies and farmers.
Presently, fertilizers attract a 5 per cent GST rate, whereas essential raw materials like Sulphuric Acid and Ammonia are taxed at a higher rate of 18 per cent. Although reducing the tax on fertilizers was discussed during the 45th and 47th sessions of the Council in September 2021 and June 2022, no changes to the rate were proposed at that time. This meeting marks the first Council assembly after an eight-month hiatus, with the last, the 52nd session, on October 7, 2023.
The meeting is also poised to revisit the recently implemented decision from October 1, 2023, to impose a 28 per cent GST on the entire value of bets within the online gaming sector. This decision was part of broader amendments approved in July and August, aiming to tax online gaming, casinos, and horse racing at a 28 per cent rate based on the total bet value, with plans for a six-month review.
Following this tax change, more than 70 show cause notices for alleged GST evasion totalling over Rs 1.12 lakh crore during the 2022-23 and 2023-24 financial years have been issued to online gaming firms. Many of these companies have since contested the notices in court.
This Council session is expected to evaluate the legal standing of these notices and discuss potential courses of action. Additionally, the Council will review a previous decision to tax corporate guarantees at 18 per cent, especially in light of the Punjab and Haryana High Court’s stay on the associated CBIC circular.
The session will also likely set a deadline for the GoM on rate rationalization to present its findings. Following multiple reconstitutions over the past year, the GoM is currently led by Bihar’s Deputy Chief Minister Samrat Chaudhary.
Moreover, the Council plans to approve amendments to the GST law based on decisions from the last meeting in October, notably concerning the taxation of Extra Neutral Alcohol or ENA, with states being given autonomy to tax ENA intended for human consumption via VAT. ENA will remain subject to an 18 per cent GST for industrial purposes.
Other discussions may include the clarification that telecom companies are required to pay GST on instalment payments for spectrum charges, aiming to resolve current uncertainties in GST collection methods during spectrum auctions. The current GST framework comprises five significant tax brackets of zero, 5, 12, 18, and 28 per cent, with luxury and sin goods attracting an additional cess above the highest rate.