The GST Council in its 50th meeting on Tuesday, presided over by Union Finance Minister Nirmala Sitharaman, exempted cancer treatment drugs, special medicines, and food for medical purpose from levy of the Goods and Services Tax.
Addressing a press conference after the marathon eight-hours-long meeting, Sitharaman said that tax exemption has also been extended to satellite launch services provided by private parties.
The Council also decided that GST on food and beverages served in cinema halls would be levied at a reduced rate of 5 per cent, down from 18 per cent levied earlier, she added.
On taxing online gaming, casinos, and horse racing, the Finance Minister said that the GST of 28 per cent would be levied on each of these activities.
The issue before the GoM (group of ministers) was whether to impose a 28 per cent GST on the face value of bets or gross gaming revenue or just on platform fees, and she clarified that the tax will be levied on the entire value.
The tax on online gaming companies would be imposed without making any differentiation based on whether the games required skill or were based on chance.
All three activities namely casino, horse racing and online gaming would be taxed at the uniform rate of 28 per cent. Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of horse racing, and on the full value of the bets placed in case of online gaming.
"The GST Council’s intention was not to hurt the online gaming industry or states with casinos. A few states shared their concerns. During the discussion, there was a moral question whether should we encourage them more than essential food items? However I am happy to say that the GST Council discussed and understood the matter deeply and took a decision which had been pending for the past three years," Sitharaman said.
On the question of Finance Ministers of Delhi and Punjab and other states raising the issue of GSTN's inclusion under the Prevention of Money Laundering Act (PMLA) ambit, Revenue Secretary Sanjay Malhotra clarified that the notification was issued to fulfill the commitment made under the Financial Action Task Force's (FATF) provisions.
This will empower tax authorities with more information about tax evasion and money laundering, he said.
GSTN is a recipient of information and doubts were raised by ministers of the aforementioned states whether it will share information about private businesses with other law enforcement agencies like the ED. It was clarified to the states that the ED is not getting any information, and it will not provide any information under the notification. Only the Director of Financial Intelligence Unit (FIU) will provide information to authorities, on the basis of which, if they feel, there are cases where money laundering or tax evasion has taken place, they can take suitable action.
The states were satisfied with this explanation, Malhotra said.
Meanwhile, the GST Council also okayed the proposal of setting up of GST benches across the country. Malhotra said that the GST state benches will be set up in a phased manner and will be first set up in state capitals having high court benches.
The GST Council also decided that all multi-utility vehicles (MUVs), whether they are sports utility vehicles (SUVs) or crossover utility vehicles (XUVs), will have to pay a 22 per cent compensation cess over and above the 28 per cent GST rate.
"It has been decided to amend the entry 52B in compensation cess notification to include all utility vehicles by whatever name called, provided they meet the parameters of length exceeding 4,000 mm, engine capacity exceeding 1,500 cc, and having ground clearance of 170 mm and above and to clarify by way of explanation that ‘ground clearance’ means ground clearance in un-laden condition," the panel said.
The tax is to be levied only on utility vehicles, Sitharaman said, informing that the meeting only clarified that utility vehicles coming under the three above mentioned parameters would be taxed.
On other issues, it was decided that private bank account details of the person seeking GST registration will now be mandatory, Central Board of Indirect Taxes (CBIC) Chairman Vivek Johri said.
The pilot of biometric authentication for GST registration is put on formal footing, he added.
In the drive undertaken by the taxation department against fake input tax credit, a total tax evasion to the tune of Rs 17,000 crore was found, the Revenue Secretary said.
Meanwhile, the GST Council decided to cut down GST levy on a slew of items like uncooked and unfried snack pellets, where GST has been brought down from 18 per cent to 5 per cent. GST has also been reduced on fish soluble paste from 18 per cent to 5 per cent.
On imitation zari thread, GST has been brought down from 12 per cent to 5 per cent.