TaxTMI 
TaxTMI 
Minutes of the 51st Meeting of GST Council held on 02nd August, 2023
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....luation Rules- Rule 31B and Rule 31C - 1.3 The Secretary to the GST Council, welcomed all the Hon'ble Members of the Council and participating officers to the 51st meeting of the GST Council. 1.4 The Secretary on behalf of the Council, welcomed Dr. Pramod Sawant, Hon'ble Chief Minister, Goa to his very first Council Meeting. The Secretary also welcomed Sh. Ajit Pawar, Hon'ble Deputy Chief Minister, Maharashtra and Sh. B. D. Kalla, Hon'ble Member from Rajasthan who were attending GST Council meeting after some time gap. 1.5 The Secretary appreciated the immense contribution made by Sh. Vivek Johri, ex-Chairman, CBIC to the Council who had superannuated on 31/07/2023. 1.6 The Secretary stated that the GST Council in its 50th meeting had made certain recommendations on taxation of casinos, race courses and online gaming and recommended levy of 28% GST on the face value. Many Hon'ble Members had requested to make corresponding amendments in various GST Acts and Rules at the earliest. The amendments have been drafted by the Law Committee and they form the main agenda for this Council meeting. The Secretary informed that the Law Committee had invited officers fro....
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.... decisions of the GST Implementation Committee (GIC). Decision: The Council ratified the notifications and circulars issued based on the recommendations by the GST Council and took note of the decisions of GST Implementation Committee. • 3. Agenda Item 2 :- Proposal for making amendments to the CGST Act, 2017, IGST Act, 2017, CGST Rules, 2017 and issuance/amendment of the Notifications pertaining to the Casino, Online gaming and Horse Racing 3.1 The Pr. Commissioner, GST Policy took up the next agenda regarding amendments in CGST Act, IGST Act, CGST Rules, and issuance of notifications pertaining to taxability of online gaming, casinos, etc. He made the detailed presentation (attached as Annexure-3) on the recommendations made by the Law Committee and the discussion made in the Officers' meeting on the said agenda. He stated that the Revenue Secretary had already mentioned that the actionable claims supplied in casinos, online gaming, and horse racing were agreed to be made taxable at 28% on full face value irrespective of whether activities are games of chance or game of skill in 50th GST Council Meeting. He stated that the matter was discussed in the two meeting of th....
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....r located outside India to a person in India. The proviso to Section 5 of IGST Act is proposed to be amended so that the integrated tax on goods, other than goods as may be notified by the Government on the recommendations of the Council, imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962. 3.7 A new Section 14A is proposed to be inserted in IGST Act to provide for special provision for taxability of supply of online money gaming by a person located outside the taxable territory to a person in India, inter-alia to specify liability on the said supplier for payment of integrated tax on such supply. Section 14A also provides the provision of a single registration of the said supplier through the Simplified Registration Scheme and the power to the Government for blocking of access by the public in case of failure to comply with the provisions. He, thereafter, stated that besides these amendments, there are some other amendments that are proposed in CGST Act ....
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.... of tokens or coins to address which it was proposed to add a sub-clause (ii) in Rule 31C in the definition to provide that value of supply shall be the total amount paid or payable by or on behalf of the player for participating in any event, including game, competition or any other activity or process, in the casino, in cases where the token, chips, coins or tickets, by whatever name called, are not required. 3.12 Further, he also stated that, it is proposed to add an Explanation to Rule 31B and Rule 31C to state that any amount received by the player by winning any event, including game, scheme, competition or any other activity or process, which is further used for playing by the said player in an event without withdrawing, shall not be considered as the amount paid or deposited with the supplier by or on behalf of the said player. This recommendation was agreed upon in the officer's meeting. 3.13 He further mentioned that in the Officers' meeting, Sikkim, Goa and Karnataka had raised the issue of treatment of refund/ return of the money to the players on account of unused chips or tokens in the case of casinos and unused wallet amounts in the case of online gaming. I....
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....s goods and services. This aspect should be decided in the case of all the online supplies of goods and services and Law Committee should examine it and then bring it before the Council. He further stated that the suggestion of Haryana to include "virtual digital assets" in the definition of "consideration" in section 2 (31) of the CGST Act 2017 was also discussed and it was noted that this is also a larger issue and requires separate examination by the Law Committee. 3.17 The Pr. Commissioner, GST Policy then took up the suggestion put forth by Gujarat wherein it was suggested that amendment may be made in section 17(5) of CGST Act for blocking of the ITC on account of tax paid by business entities for their employees in relation to online gaming or casinos. He stated that the issue was discussed in Officers' meeting and it was recommended that this issue can be separately examined by Law Committee, as this issue may not require amendment in law. 3.18 After the presentation of the Principal Commissioner, GSTPW, the Secretary opened the floor for suggestions/comments from the Members of the Council. 3.19 The Hon'ble Member from Tamil Nadu informed tha....
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....il Meeting. However, he raised the issue of Place of Supply in case of online gaming and suggested that in case of online gaming, recording of PIN code of the recipient should be made mandatory. He therefore requested that specific provision for recording of PIN code be notified so that consuming State could get their due revenue. 3.24 The Secretary suggested that the issue of requirement of PIN code of the recipient and Place of Supply is a larger issue and not only related to online gaming but also to other online supplies as well. Therefore, it may be separately examined in detail by the Law Committee including all cases of online supply of goods and services. He also recommended that the Law Committee should come up with the formulation in the future GST Council Meeting. The Council agreed to the issue of referring the matter to the Law Committee. 3.25 The Hon'ble Member from Sikkim seconded the views of the State of Goa. He further stated that Sikkim is a small landlocked State having population of only six lakh and major source of livelihood is through casino industry. He stated that high levy of 28% on the value of chips purchased would lead to closure of casino indu....
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....nal decision regarding the value of supply. 3.28 The Hon'ble Member from Bihar supported the proposal to levy higher tax rate on gambling as it would not only increase the revenue of the Centre and States but it also has social and moral connotations. The Hon'ble Member further requested the Members of the Council to bring the proposed amendment bill to implement recommendation of GST Council on casino, race course and online gaming as soon as possible. The Hon'ble Member from Bihar thanked the Chairperson for inclusion of settlement amount of States in PIB releases. Further, the Hon'ble Member from Bihar requested the Chairperson to help Bihar in determining the actual potential of GST collection in the State. He further suggested that institutions like NIPFP may help Bihar in determining the revenue potential of its market activities, business and trading transactions. The Hon'ble Member suggested to include some indicator in online gaming to identify actual location of player so that tax collection goes only to concerned State only. 3.29 The Hon'ble Chairperson thanked the Member from Bihar for his inputs and assured that in respect of revenue collectio....
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.... are three scenarios in this online gaming taxation. The first scenario which prevailed before the bringing the proposal of taxation of casino, race course and online gaming in GST Council which means that 18% tax was being charged on platform fee on every transaction being played. The second scenario in which tax at the rate of 28% on full amount of each game would lead to large amount of taxation. In the third scenario, the tax rate of 28% is payable only when one buys the chips in casino. If the third scenario is implemented, it may not lead to much revenue growth. 3.35 The Revenue Secretary clarified that tax at the rate of 28% would be paid only once on transaction amount paid to online gaming operator. Suppose a person pays Rs. 100 for a game then he has to pay 28% tax on this transaction. Earlier the online gaming operator was paying tax only on GGR/platform fee at 18% rate. Suppose that on playing a game of Rs. 100, platform fee was 15% and online gaming operator paying tax at rate of 18% which was resulted in tax amount of only Rs.2.7. It was found that on an average, a person plays 3 times and therefore, for a game of Rs. 100, average tax amount was collected by Governme....
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....tated that the issue of taxation on casino, race course and online gaming involves both taxation from the GST point of view and revenue from the State point of view. The Member highlighted the issue regarding hill States, North-Eastern States with international borders, small States specifically Goa; that the economic activity of these States like Forest and Mining are constrained by environmental and infrastructural challenges. He further stated that the economy of Goa depends on tourism and Casinos. The Hon'ble Member suggested that as Goa accepted 28% rate of tax on Casinos, liberal and flexible view may be taken on the value on which tax will be levied in the interest of co-operative federalism and growth of the small States like Goa. 3.39 The Hon'ble Member from Karnataka supported the view taken by Chhattisgarh and Bihar. He further stated that it is not desirable to go back on well considered decision taken after a thorough discussion in a short span of time. He further stated that all the efforts should be made to harness the full potential of revenue without showing any differential consideration for activities like betting which are not socially desirable. The Ho....
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....ded that as most of members agreed to the proposal in the agenda, the amendment is required to be carried out in CGST Act by the Centre and in SGST Acts by the States and they have to be synchronised. He elicited the views of the Hon'ble Members in carrying out the requisite amendments in two months so that they can be made effective from 01.10.2023. 3.44 The Hon'ble Member from Delhi expressed her disagreement with the decision taken by the Council on the issue of Online Gaming. She also opined that the decision taken on Online Gaming will have wider impact on entire Start-up Sector. She urged that Online Gaming activities should not be conflated with gambling activities. She further added that the decision of the Council would enable illegal betting and gambling sites which will operate from tax havens and will push Online Gaming sector from legal space into illegal space. 3.45 The Revenue Secretary clarified that the amendment presented in the Council pertains to the domain of Online Gaming exclusively where stakes are involved and not to the entire online gaming industry. It is important to note that the proposed definition merely states that instances involving mone....
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....zed that such a move would not only impact the Online Gaming Industry but also the entire Start-up ecosystem. 3.50 She highlighted that there was still a juncture to address this concern and once the Council passed the legislation, any future change would become very difficult. 3.51 The Chairperson responded to the concerns raised by the Hon'ble Member from Delhi and assured that all the points brought forward had been under deliberation since the beginning and were considered comprehensively. The final decision taken in the last meeting was a collective wisdom of Council involving all the members including Delhi who carefully weighed each and every point. 3.52 She brought out that the stakeholders referred by the Hon'ble Member from Delhi had been given ample opportunities to engage with the Council. These stakeholders had met with the Council separately, as a group, and as representatives in the Group of Ministers (GoM) specifically formed to address this issue, over a period of three years. The Chairperson emphasized that the Council was fully conscious of the significance of the nascent start-up ecosystem, particularly within the growing online gaming industry. She m....
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....at the concept of 'full face value' remains ambiguous, especially considering that certain activities in Casinos also involve direct payments from credit card, etc. without the need for purchase of chips. He recommended that the Law Committee together with State of Goa and Sikkim, collaboratively devise rules that align with a system not detrimental to the Casino Industry. He noted that the Ministry of Electronics and Information Technology (MeitY) is working on framing Rules for self-regulatory bodies for Online Gaming and Casinos indicating that the Council has the competence to establish differential rules for defining 'full face value' for the Casinos. He expressed gratitude towards the Chairperson for previously referring the matter back to the Group of Ministers (GoM) for reconsideration. He suggested that the taxation should be aligned with the tax charged in the pre-GST era. He also opined that taxing on the basis of Gross Gaming Revenue (GGR) would have been a wise decision, benefiting all industries and the government. He concluded by disagreeing with the decision taken by the GST Council as he firmly believe it would adversely impact State of Goa and th....
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....t delay, considering the prolonged deliberations and the urgency to address the revenue concerns. 3.59 The Hon'ble Member from Chhattisgarh appealed to Goa that decisions taken with the greater wisdom of the Council were certainly in the interest of all the States in the long run. He then apprised the Council about the forthcoming elections in his State in November and the enforcement of Code of Conduct from October, thus, they would bring the ordinance before 01.10.2023. 3.60 The Hon'ble Member from Himachal Pradesh stated they desired early implementation of the decision taken in the 50th meeting and endorsed the amendments proposed. He also ensured that the State would bring the enactments within the two months so that the State could take the benefit from the decision on an early date. 3.61 The Hon'ble Member from Haryana sought clarification on whether the commission or platform fee charged by companies would be subject to taxation again considering the tax being imposed on the face value at 28%. 3.62 In response, the Secretary clarified that such double taxation would not be applicable. There would be no need to tax the commission or platform fee separately. T....
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....ng viewpoints of Goa, Sikkim, Delhi and Punjab. Nonetheless, he urged the Council to proceed with implementation highlighting the possibility of revisiting the decision should the need arise. The Secretary informed the Council that similar apprehensions were made when 28% tax was proposed to be charged in case of lottery and it was feared that time also that the industry would be wiped out but that is not the case now. He acknowledged all the fears and apprehensions stated by the State of Goa and Sikkim. He assured them the Council has always worked for the betterment and development of each State. The Secretary appealed for unanimous approval of the decision, pointing out that a review would take place after six months of implementation. A comprehensive status report, encompassing revenue data and stakeholders' feedback, would be assessed during this review period, allowing the Council to make informed decisions while moving forward. 3.69 The Hon'ble Member from Tamil Nadu expressed his concern that the apprehensions of State were not fully considered before taking a unanimous decision. 3.70 The Chairperson responded to assure the Member that the concerns of Tamil Nadu w....
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....airperson expressed her gratitude to all the Members for attending the meeting, which focused on implementing the decision taken during the 50th Council Meeting to amend the law accordingly. She acknowledged the importance of this issue for some States and respected their views. The present meeting was convened to facilitate the implementation of that decision and the inputs of all Members were taken into consideration for making any necessary adjustments to the proposed amendments. She also stated the inputs given by Kerala for which other States have also agreed. She assured the Council that any decision not taken unanimously would be recorded with the name of the State expressing dissent. She also mentioned that a previous decision regarding lottery was similarly recorded when it was not unanimous. She emphasized the significance of the Council's decision-making process which is a constitutional body and cautioned against undermining it by repeatedly referring decisions back to the Group of Ministers or the Council itself for reconsideration, which come back again within a short span of time to take a decision already taken forward for implementation. The Chairperson reiter....