50th GST Council Meeting

Resistance against bringing GST Network (GSTN) under the Prevention of Money Laundering Act (PMLA)

The GSTN is an information technology system responsible for managing the GST portal. The union government collaborates with private entities through the GSTN for monitoring domestic financial activity. 

Recently, the union government announced its decision to bring GSTN under PMLA. 

The 50th GST Council meeting commenced with opposition from several states regarding the Union Government’s decision to bring the GST Network (GSTN) under the PMLA. State representatives, led by the Finance Ministers of Delhi and Punjab, voiced concerns about the potential impact on taxpayers and the objective of decriminalizing offenses under the GST law.

Union Revenue Secretary Sanjay Malhotra addressed the concerns by explaining that the inclusion of GSTN under PMLA provisions is a requirement of the Financial Action Task Force. He clarified that the notification does not involve sharing private business information with other law enforcement agencies, including the Enforcement Directorate (ED). The ED will neither receive nor provide information, and the notification aims to empower tax authorities with more information to combat tax evasion and money laundering.

Reduction in GST Rates

The GST Council decided to reduce the tax rates on certain items. The GST rate on uncooked, unfried snack pellets and fish-soluble paste was reduced from 18% to 5%. Similarly, imitation Zari threads or yarn will now attract a 5% GST rate instead of the previous 12%. Additionally, the tax rate on food and beverages consumed inside cinema halls was reduced to 5% without input tax credits, as opposed to the previous 18% on cinema services.

Clarification on SUV Tax Treatment

The GST Council meeting witnessed a revision of the definition of Sport Utility Vehicles (SUVs) for the purpose of levying GST compensation cess. Previously, the definition included four parameters: being popularly known as an SUV, having a length of 4 meters or more, an engine capacity of 1,500 cc and above, and an unladed ground clearance of at least 170 mm. However, the revised definition will now consider only three parameters: a length of 4 meters or more, an engine capacity of 1,500 cc and above, and an unladed ground clearance of 170 mm or higher. This clarification aims to provide a more precise framework for determining the applicability of GST compensation cess on SUVs.

Moreover, the concerns raised by the Finance Ministers of Tamil Nadu and Punjab regarding the impact of higher GST Compensation Cess on sedans were addressed.

Exemptions and Clarifications

The Council offered exemptions on GST for satellite launch services provided by private organizations. It also discussed the establishment of GST Appellate Tribunals to resolve mounting disputes within four to six months. These tribunals will be set up in State capitals and locations where High Courts have benches, ensuring efficient resolution of GST-related issues.

28% GST on Online Gaming, Horse Racing, and Casinos

Minister Sitharaman stated that a GST rate of 28% will be imposed on the total value of online gaming, horse racing, and casinos. This decision resolves the long-standing debate on the tax treatment of these activities, irrespective of whether they involve skill, chance, or a combination of both.