Online gaming companies may get GST relief

Experts say industry would welcome if there is enabling provision under GST laws for the government to provide retrospective exemption in select cases.
The government could introduce sunset clause for anti-profiteering provisions introduced at the time of GST implementation to prevent inflation.
The government could introduce sunset clause for anti-profiteering provisions introduced at the time of GST implementation to prevent inflation.

NEW DELHI: The 53rd GST Council meeting, which is taking place after a gap of nearly nine months, is likely to be action-packed with decisions impacting businesses across sectors.

As per sources, online gaming companies may get major relief on Saturday. They believe the government might cancel retrospective or backdated taxes for the Indian online gaming industry. However, the current 28% tax rate is likely to stay the same, said sources.

“For online gaming companies, apart from the rate, the aspect of valuation needs deliberation. It is hoped that for the anti-profiteering provisions, there will be some announcements with respect to determination of methodology so that different sectors can determine the quantum of the profiteering”, said Abhishek A Rastogi, founder of Rastogi Chambers, who is representing industry on these issues in different courts.

In addition, the government could introduce sunset clause for anti-profiteering provisions introduced at the time of GST implementation to prevent inflation and give benefit of reduced taxes to the customers. According to the sources, these provisions will likely be put to end in next two to three years.

“After almost seven years of GST implementation, ideally these provisions should now be withdrawn. Globally, these provisions have been introduced for a short term to avoid possibility of inflation at the time of transition only,” said Pratik Jain, Partner with Price Waterhouse & Co LLP.

The Centre is likely to issue clarity around GST on corporate guarantee between related parties. The debate centers on determining taxable value considering the actual amount used by the beneficiary when the guaranteed amount surpasses the utilisation. The taxpayers await clarity on whether this adjustment should apply going forward or be applied to past transactions. In October, the Council declared that corporate guarantees for bank loans provided by the parent company to its subsidiary would be subject to an 18% tax rate.

Experts say industry would welcome if there is enabling provision under GST laws for the government to provide retrospective exemption in select cases, which was in existence under erstwhile excise laws.

The government may reduce the amount of pre-deposit to be paid for filing appeals in the appellate tribunal from 10% to 7% of the disputed tax or a maximum of Rs 20 crore for CGST and SGST, and Rs 40 crore for IGST.

GST rates on tobacco rates may be rationalised on Saturday. Currently, tobacco products attract the highest rate of 28% with additional cess.

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