GST Council Meeting: Expected Impact on Prices - Goods Likely to Become Dearer & Cheaper

Introduction to the GST Council Meeting 

The GST Council meeting scheduled to be held in New Delhi today will address several crucial issues related to taxation and norms. The council, led by the Union finance minister and state representatives, will focus on topics such as online gaming taxation, utility vehicle classification, GST rates for food and beverages in multiplexes, import exemptions for specific medicines, and the formation of an appellate tribunal.

These discussions aim to bring clarity and make decisions on various aspects of the Goods and Services Tax (GST) framework.

Expected Changes in Prices :Goods Likely to Become Cheaper

• Food and beverages inside cinema halls: The Multiplex Association of India (MAI) has proposed a reduction in taxes for specific categories of food and beverages sold within cinema halls. The recommendation suggests lowering the current 18% tax to 5%, acknowledging that food sales contribute significantly to cinema owners' revenue. This change is expected to make movie snacks more affordable for consumers.

• Medicines: The fitment committee has suggested tax exemptions for specific categories of medicines. It recommends exempting medicines costing up to Rs 36 lakh from GST, considering that patients often rely on crowdfunding for funding. Additionally, the committee proposes reducing the GST rates on unfried snack pellets from 18% to 5% and exempting the 12% Integrated GST (IGST) on imported cancer medicine (dinutuximab/qarziba) for personal use.

• Satellite services launch: The committee has recommended tax exemption for satellite services launches, potentially resulting in cost savings for satellite operators and related services.

Goods Likely to Become Dearer

• Online gaming, casinos, and horse racing: The committee led by Meghalaya Chief Minister Conrad Sangma has proposed increasing the taxation on online gaming, horse racing, and casinos. The committee suggests levying a 28% GST on all three supplies. In contrast, Goa has recommended an 18% tax only on platform fees, with contributions to the prize pool being tax-exempt.

• Multi Utility Vehicles (MUVs) and Crossover Utility Vehicles (XUVs): The fitment committee has recommended an increase in the cess on utility vehicles that meet specific criteria. All MUVs and XUVs exceeding 4 meters in length, with an engine capacity above 1,500 cc, and a ground clearance of over 170 mm in 'un-laden condition,' would attract a 22% cess. This change may result in higher prices for these vehicles.

Other Discussion Points and Final Remarks

Apart from the aforementioned topics, the GST Council is expected to address issues related to the Tax Collection at Source (TCS) liability for e-commerce trading conducted through the Open Network for Digital Commerce. The council will review the committee's recommendation to impose the TCS provision when the difference exceeds 20% or Rs 25 lakh. The final decision on this matter will be made during the 50th meeting of the GST Council.

Some relevant and latest facts for the news:

• The GST Council is a joint forum of the central and state governments that is responsible for deciding the rates and rules of the Goods and Services Tax (GST).

• The 50th meeting of the GST Council is being held on Tuesday, July 12, 2023.

• The meeting is expected to discuss a number of key issues, including taxation of online gaming, definition of utility vehicles, and tightening of norms for registration and claiming ITC.

• Some items are likely to become cheaper, such as food and beverages inside cinema halls and medicines.

• Other items are likely to become dearer, such as online gaming, casinos, and horse racing.

• The GST Council is also expected to decide on the TCS liability of suppliers engaged in e-commerce trading via the government's Open Network for Digital Commerce.

Here are some additional facts that are relevant to the news:

• The fitment committee is a group of experts who are responsible for recommending the GST rates for various goods and services.

• The Meghalaya Chief Minister Conrad Sangma-led committee was formed to recommend the taxation of online gaming, horse racing, and casinos.

• The Open Network for Digital Commerce (ONDC) is a government initiative that aims to create a unified platform for e-commerce trading in India.

Conclusion

The GST Council meeting will have far-reaching implications for various goods and services. By examining the potential outcomes of the discussions, individuals can anticipate possible changes in prices and plan their financial decisions accordingly.