GST Panels to Examine Potential Industries for Taxation

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GST in India
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India’s cabinet has announced that it is reviewing goods and service (GST) tax laws regarding certain industries, looking to offset the large economic losses after the nearly two-year-long Covid-19 pandemic.

The government ran into budgetary shortfalls last month with many industries falling short of income predictions due to Covid, and with the states coming in arrears of Rs 3-lakh-crore, new provisions are being proposed to help fill the gap. According to the BBC, India’s fiscal loss is the highest drop-off in the country’s history, since markets were opened to the world in 1991.

However, Finance Minister Nirmala Sitharaman plans to push several cases that would stimulate the economy. Big spending on infrastructure is ahead, along with the considerations of higher taxes on certain goods and products including cars, soft drinks, pan masala, tobacco and coal.

Panel to Decide on Proper Taxation of Gambling Industry

Another large topic for the states and their finance ministers is online gambling, which has been difficult to regulate and levy due to various laws and casino providers that operate beyond India’s borders. Reports from 2017 onward show that the gambling industry grows by nearly 10 per cent every year. Currently, India’s laws are ambiguous when it comes to the online gambling industry. With the only law regarding the topic being incredibly outdated, the law completely ignores online establishments for betting and focuses solely on regulating physical casinos.

As the popularity of online gambling continues to soar due to accessibility, individuals being home during the pandemic, and developments by casino companies themselves, many expected that the Indian government would have already addressed the issue of taxation within this industry – most lawmakers chose to ignore or push back on legalization for a variety of reasons.

As reported by mid-day.com, currently, the gambling sector brings in 18 per cent GST. The panel will decide if this is an accurate valuation of the industry or if there should be changes in the systems of measurements. Additionally, they will decide if there need to be legal changes that would force offshore casinos to purchase licences, with those fees working to bridge the gap. Operators may have to start paying Corporate Income Tax (CIT).

Coronavirus Supply Tax Provisions

At the same time as the government is looking for any way they can help push the economy forward, the government “constituted an eight-member ministerial panel under the Meghalaya chief minister Conrad K Sangma to consider Goods and Services Tax (GST) exemptions on a range of Covid-19 essentials such as vaccines, drugs, testing kits and ventilators,” according to the Hindustani Times.

Currently, taxes are imposed on necessary Covid-19 related relief items, including Covid vaccines, drugs and medicine, Covid testing kits, medical-grade oxygen, pulse oximeters, hand sanitiser, oxygen therapy instruments (concentrators, generators and ventilators), PPE kits, N95 masks, surgical masks, and thermometers. This particular panel will focus on studying the necessity of a relief bill that would exempt these items from the usual GST.

Currently, Finance Minister Sitharaman told media sources they are not supportive of the exemption as it would warp the input tax credit system and “eventually cost more for the consumer.” We are likely to see the government take a number of different routes towards taxation rules, especially as many tax laws are outdated, with the Income Tax Act of 1961 being the most recent set of laws. Although some updates and changes have been made over the years, we are likely to see the biggest changes to the Tax Act happening within the next two years, as the government attempts to revive the economy.