The upcoming meeting of the GST Council is expected to cover various topics, including the taxation of online gaming and corporate guarantees for related party services. Additionally, there will be discussions on taxing spectrum fees paid by telecommunications companies and the progress of the Group of Ministers (GoM) in finalizing the report on Goods and Service Tax (GST) rate rationalization. This gathering marks the first meeting of the GST Council in eight months, with the previous one being held on October 7, 2023.
Regarding online gaming, the council is likely to review the decision to impose a 28% GST on the full value of bets for online gaming companies, which took effect on October 1, 2023. Show cause notices have been issued to over 70 online gaming companies for alleged GST evasion, amounting to over Rs 1.12 lakh crore during the financial years 2022-23 and 2023-24. Legal issues concerning these notices and the implementation of the decision are set to be discussed.
In the realm of corporate guarantees, the council will revisit the decision to levy 18% GST on guarantees provided by corporations to their subsidiaries. The meeting is also anticipated to address the legal aspects of a Circular on corporate guarantees, which was stayed by the Punjab and Haryana High Court.
Moreover, the GST Council is slated to clarify the requirement for telecom companies to pay GST along with the installments towards spectrum charges, in a bid to eliminate confusion among field formations. The rate rationalization panel, tasked with suggesting necessary rate adjustments and correcting inverted duty structures, is yet to convene under the leadership of Uttar Pradesh Finance Minister Suresh Kumar Khanna. The objective is to simplify the rate structure, review the GST exemption list, and enhance GST revenues. The panel was previously led by former Karnataka Chief Minister Basavaraj Bommai and had proposed changes in tax rates for some goods and services in an interim report submitted in June 2022.
At present, the GST regime comprises five broad tax slabs (zero, 5, 12, 18, and 28%) along with a cess on luxury and demerit goods above the highest 28% rate.
Read more: New GST Guidelines for Telecom Spectrum Payments: What to Expect