The 50th meeting of the Goods and Services Tax (GST) Council, chaired by the Hon’ble Union Finance and Corporate Affairs Minister, Ms. Nirmala Sitharaman, took place on July 11, 2023. This significant meeting resulted in crucial decisions impacting the online gaming industry, horse racing businesses, healthcare, automobile sector, and the food and beverage (F&B) industry.

Uniform Tax Rate on Online Gaming and Horse Racing

The GST Council, in collaboration with the Group of Ministers, recommended the imposition of a uniform tax rate of 28% on online gaming, casino activities, and horse racing businesses. This decision aimed to simplify the tax regime and concluded the longstanding debate on whether online gaming is a game of skill or chance. The 28% tax rate will be applicable to the face value of chips in casinos, the full-face value of bets in horse racing, and the Gross Gaming Revenue (GGR) or the full value of bets in online gaming.

Finance Minister Sitharaman clarified that the intention was to streamline taxation in the online gaming sector without delving into the complexity of distinguishing games of skill from games of chance. The decision aligns with the regulations set by the Ministry of Electronics and Information Technology (MeitY).

Exemptions and Clarifications

The GST Council also granted exemptions on the importation of cancer medicines, drugs used for treating rare diseases, and food designed for special medical purposes. Additionally, utility vehicles, meeting specific parameters related to length, engine capacity, and ground clearance, will attract a 22% cess over and above the GST rate. The move aimed to provide clarity in assessing vehicles based on objective parameters rather than model names.

In the Food and Beverage sector, the council made significant amendments. Uncooked/unfried snack pellets will now attract a 5% GST rate, and payments of GST on such products during the past period will be regularized “as is.” The supply of food and beverages in cinema halls will now be taxed at a reduced 5% rate instead of the previous 18%, as long as they are part of a service and supplied independently of cinema exhibition services. This move is expected to enhance audience access to theaters by reducing costs and improving the overall cinema experience.

Conclusion

The decisions taken during the 50th GST Council Meeting reflect the government’s efforts to simplify tax structures, provide exemptions in critical sectors, and promote positive changes in the F&B and entertainment industries. The move towards a uniform tax rate in online gaming demonstrates a commitment to streamlining regulations in a rapidly evolving digital landscape.