The government keeps on amending and updating the provisions related to different types of taxes. The reason could be anything, but in most cases, the changes are made for the ease of the taxpayers.
On economic front, World Bank has retained economic growth projection of India for FY 2025 @ 6.4% mainly on account of strong economy demand, enhanced spending on public infrastructure and credit growth At 6.4%, India may remain world’s fastest growing large economy For China, growth may be 4.5% and for US, 1.6% only PHD Chamber of Commerce has forecasted 7.4% GDP growth for the T current fiscal
In one of the recent events in Gujarat, the Prime Minister has expressed that India is bound to be the third largest economy and that’s the guarantee he gives. Today India is the fifth largest economy and is considered as an important pillar of stability and a global growth engine. Similarly, the Finance Minister TL has said that India’s GDP may hit $ 5 trillion by FY 2028
E-way bills generated in December 2023 surged to 9.52 crore, second highest monthly figure of E-way Electric bills in GST era so far. This is going to positively impact GST collection in January-February, 2024 In October 2023, it was 10. 03 crore
The National Informatic Centre (NIC) withdrew its Circular related with blocking the generation of e-wi Fior bill without e-invoice IRN The said notification was to come into effect from March, 1 2024 NIC and res issued an advisory on HSN codes in E-way bill system CBIC had attended the due dates for GSTR-3B and GSTR 9/9C for specified districts in Tamil Nadu by few days Now payment of tax through debit Ana cards and credit cards has been allowed
Goods and Services Tax (GST) in India
Goods and Services Tax is the tax levied by the Indian Government on the procurement of goods or services in the country. The tax was introduced in the year 2017. The tax has replaced all the other indirect taxes, like Value Added Tax (VAT), and compressed them into a single tax. GST (Goods and Services Tax) is charged by the government in slabs. The present slabs being 5%, 12%, 18%, and 28%. GST is managed by the Goods and Services Tax Council and is governed by the Goods and Services Tax Act, 2017.
GST is levied on all types of goods and services except petroleum products, and electricity, on which the taxes are levied by the state governments. It is divided into two parts namely, State Goods and Services Tax (SGST) collected by state governments and Central Goods and Services Tax (CGST) collected by the central government. The share of both governments is equal to GST. For example, if 5% GST is being charged on a product the SGST (2.5%) and CGST (2.5%) will be equal. There is another type of tax Integrated Goods and Services Tax (IGST) that is charged on goods and services supplied inter-state.
The tax was introduced to remove the cascading of taxes, the situation of collecting multiple taxes on every level of production. It is done under GST too, but the manufacturer is refunded back on further levels. It is a destination-based tax, it is collected by the state in which the said good or service is consumed rather than to that state in which the good or service was manufactured.
What are the three types of GST?
Currently, there are three forms of GST: central goods and services tax (CGST), state goods and services tax (SGST), and integrated goods and services tax (IGST). While a taxpayer must deposit CGST and SGST for all intrastate transactions, IGST is required for imports and interstate transactions.
Who has to pay the GST rate?
Suppliers of taxable products and services must charge and collect GST at the specified rate from their buyers or customers. The collected GST must be submitted to the government after claiming the appropriate input tax credit on their purchases. It’s referred to as the forward charge. In other circumstances, the buyer or consumer pays the GST directly to the government as a reverse charge.
Before GST, there was a Service Tax which was levied on an allotment of loans. The rate of Service Tax was 15% which has now increased to 18% for GST. According to the opinion of lots of people, the effective loan amount will increase due to higher GST rates by 3% over Service Tax rates. While others say that increased GST rates will increase EMIs. However, all the doubts of people will also be cleared that GST is not collected on repayment of loan or payment of interest on the loan.
GST is levied on the processing charges and any other charges rather than the principal repayment and interest payment amount. Among others, the included charges are Loan Processing, Loan Prepayment Charges, etc, if any. Since a major part of the loan repayment consists of principal repayment and interest payment, the GST effect on loans would tend to be negligible. To have a better understanding of the GST impact have a look at the mentioned GST impacts on loans.
The important loans and their respective GST rates are listed down here.
Personal Loan– 18%
Home Loans– 18%
Car Loan– 18%
GST on Cars
Since the implementation of GST on cars, the GST rates on all personal use vehicles have been fixed at 28% no matter whether the vehicle is petrol-powered or diesel-powered. Other than this, a composition cess is also levied on cars over the announced GST rates. This, in turn, estimated the applicable tax rates on vehicles under GST between 29% to 50%. However, vehicles using cleaner technologies such as fuel cells (e.g. hydrogen fuel cells) and electric vehicles attract subsidized lower rates of taxation. Know more about GST on cars.
Since gold-made items (jewellery) are brought into the GST system, the rates applicable are 3%. However, a 5% GST is also levied as jewellery-making charges if the manufacturing task is being outsourced from a job worker. The Jeweler is liable to claim these making charges as an input tax credit (ITC) which in turn calculates the final bill to be paid by the purchaser only at a chargeable 3% GST charge. Know more about GST on Gold and its impact on the gold industry.
In the real estate sector, the GST is levied only on the purchase of an under-development property. After the inclusion of real estate under the GST regime, the applicable tax rates on commercial and residential transactions were 12% valid till 31st March 2019. But, from the very next day, Ist April, the GST rates on residential real estate have been altered to 5% for non-affordable housing properties while for affordable housing properties levied tax rate is 1%. On the other hand, the ready-to-move-in property is not liable to attract any GST. In addition to this, various building materials used for the construction of houses/flats that fall under GST are taxable from 5% (sand, marble rubble, etc.) to 28% (cement, etc.). Know more about GST”s impact on real estate in India.
The Government is considering some new tactics so that a few new products could also be brought into the GST system. The Finance Minister hinted that the government could include other products under GST with tax rates reduction on some products. The highly anticipated products to introduce under the GST rates slab include:
Petroleum products- Petrol and Diese
Land
Electricity
Others
GST rates refer to the percentage rates of tax imposed on the sale of goods or services under the CGST, SGST and IGST Acts. A business registered under the GST law must issue invoices with GST amounts charged on the value of supply.
The GST rates in CGST and SGST (For intra-state transactions) are approximately the same. Whereas, the GST rate in the case of IGST (For inter-state transactions) is approximately the sum total of CGST and SGST rate.
Types of GST Rates and GST Rate structure in India
The primary GST slabs for any regular taxpayers are presently pegged at 0% (nil-rated), 5%, 12%, 18% & 28%. There are a few lesser-used GST rates such as 3% and 0.25%.
Also, the composition taxable persons must pay GST at lower or nominal rates such as 1.5% or 5% or 6% on their turnover. There is a concept of TDS and TCS under GST as well, whose rates are 2% and 1% respectively.
These are the total GST rate of IGST for interstate supply or the addition of both CGST and SGST for intrastate supply. The GST rates shall be multiplied by the assessable value of the supply to arrive at the GST amounts in a tax invoice.
Further, the GST law levies cess in addition to the above GST rates on the sale of some items such as cigarettes, tobacco, aerated water, petrol, and motor vehicles, rates widely varying from 1% to 204%.
The GST rate structure for some of the commonly-used consumable products is given in the below table. For more items, type in the item you wish to know the GST rate of by visiting our HSN code and GST rate finder.
The year 2024 has begun with key changes in GST rates passed during the last week of December 2022. During its meetings, the GST Council also revised the GST rates of some key items across 2022. Some were done to correct the prevailing inverted tax structure, whereas a few were revised for revenue augmentation. The following sections cover the summarized details of changes to GST rates in India with the new GST rates 2024.
Clarifications on tax rates for the supply of goods and services are as follows-
INDIRECT TAXES
Legislative Changes in Customs Laws
GST on Online Gaming
The online gaming industry in India has experienced significant growth, becoming one of the largest markets globally. The GST Council is mulling over the proposal to levy a higher 28% tax rate on the contest entry amounts. The decision on rate of tax and value on which tax is to be levied will bring clarity on industry’s viability and sustainability. This report analyzes the evolution of tax regulations, forecasts the industry’s growth and GST impact based on industry data, and recommends careful consideration of any GST burden increase, taking into account industry dynamics and global policies. The report was prepared in partnership with the Federation of Indian Fantasy Sports (FIFS), providing valuable industry statistics and forecasts.
Presently, the GST regime differentiates online games based on skills versus chance. With the recommendation made at the 50th GST Council meeting, 28% GST will be charged on full face value. Further, GST law will be amended soon to include online gaming under its scope as currently it falls under actionable claims.
A game of skill is one where the outcome is dependent on the expertise, practice, and experience of the player and not merely on chance. Some examples include rummy and fantasy sports games like Dream this distinction is important as skill games invite a lower tax rate applicability.
Whereas games of chance are treated similarly to betting, gambling, and horse racing. Thus, they are subject to Rule 31A of the CGST Rules, 2018, which charges a higher GST rate.
However, an issue arises as the line between skill, and chance can be thin in some cases, as can be gleaned from the recent case of Gameskraft Technology. The tax authorities clubbed together all its games, including rummy, into games of chance, thus inviting a higher GST tax rate.
A second setback to the gaming industry?
Recently, the Supreme Court stayed Karnataka High Court’s order in the matter of online gaming company GamesKraft. In May, the High Court had stayed show caused notice (SCN) for deposit of GST due totaling Rs 21,000 crore. It held that online ‘games of skill’ like rummy are not taxable as betting or gambling under the GST Act.
The company had questioned the September 23, 2022 show cause notice issued by the Directorate of GST that alleged it for evading GST at the rate of 28% on the entire sum paid by the players for playing the game on its platform.
The company was paying GST at 18% only on the platform and not on the entire money pooled in by the players to play rummy. It had contended that rummy being a game of skill cannot be brought under the definition of betting and gambling.
As of now, the activity of online money gaming will be taxed on the total amount paid or payable to or deposited with the supplier, by or on behalf of the player, irrespective of whether the game is based on skill, or chance, or both.
Initial reaction to GST on gaming
Finance Minister Nirmala Sitharaman in July announced the decision of the GST Council to impose a 28 percent tax on online gaming, casinos and horse racing. The decision then had led to uncertainty among the industry players, who were worried that the move will potentially destroy online and real-money gaming in India.
Also to limit participation of the players, gamers are supposed to pay a 30 percent of TDS in case they win more than Rs 10,000 in a game. This made the imposition of 28 percent tax an ‘industry-killer’ move to them.
In his frustration, former Shark Tank Judge Ashneer Grover on social media said, “RIP – Real money gaming industry in India. If the govt is thinking people will put in Rs 100 to play on Rs 72 pot entry (28 per cent Gross GST); and if they win Rs 54 (after platform fees) – they will pay 30 per cent TDS on that – for which they will get a free swimming pool in their living room come the first monsoon – not happening!”
According to media reports, the decision was met with outrage from gaming industry bodies such as All-India Gaming Federation (AIGF) and Federation of Indian Fantasy Sports (FIFS). They believed that the gamers will not be able to bear such increase in cost and will move to black market operations.
What will be the impact?
Different GST rates were applicable in the previous system based on the online game’s nature. For example, games of skill (such as rummy or fantasy sports), which depend on a player’s expertise, were subject to an 18% GST rate. In contrast, games of chance (such as gambling and betting), where the outcomes rely mostly on luck, were taxed at a 28% GST rate. Under the new framework, the GST rate of 28% will apply to the full value of the bets placed in online gaming. This GST rate shall apply regardless of whether these gaming activities are categorized as games of skill or chance. As per the amended Central Goods and Service Act, online gaming is defined as offering games on the internet, including online money gaming. Online money gaming refers to online games where players bet money or virtual assets to win money or virtual assets, regardless of the nature of the game being based on skill or chance. Furthermore, the Integrated Goods and Service Act, has also been amended to introduce provisions requiring foreign suppliers offering online money gaming to charge GST to Indian customers. Online gaming businesses should proactively assess their tax positions and adapt their ERP systems and tax calculation processes to align with the amended GST regulations, ensuring seamless compliance.
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