Indirect Tax & ​Foreign Trade Insights - Issue 11

Indirect Tax_Sharp & Stellar_Issue_11.pdf

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Highlights

• Bar Council of Kerala Challenges the demand raised on it by CBIC

• SC to hear 27 pleas challenging the 28% GST on Online Gaming

• Import of High End and High Value used medical equipment allowed

• Essential commodities permitted to be exported to the Republic of Maldives during 2024-25

• DGFT Implements Online Submission of ANFs and Appendices

Insights

Real money gaming has been a contentious issue under this regime right from the beginning. This is essentially on two fronts viz., the value and the rate. While the Revenue Authorities naturally are desirous of collecting the GST on the entire value of money involved, including the deposits / pool money / prize money, the gaming platform organisers have been arguing that the platform fees that is accounted as revenue in the books of such platforms should only be considered towards consideration and accordingly GST be collected on the same.

On the tax rate part, the Revenue Authorities have timelessly expressed their interests to collect 28% GST under game of chance (a synonym of lottery & betting where the user / player does not have any control on the outcome) whereas the platforms have emphasised the involvement of skills in the games such as online cricket, rummy, etc where the user with better skills outperforms the users with relatively limited skills. While the game of chance which is in the nature of betting and gambling attracted 28% GST, other games not qualified under the said criteria (such as a game based on skill) attracted a lower GST @18%. Therefore, the arguments of the platforms that certain games are game of skills are aimed at reduced tax rate of 18%.

After multiple divergent decisions from various HCs, the GST council finally brought out a change in the GST law and classified all type of online money games (whether game of skill or chance) under 28% criteria by terming it to be a ‘specified-actionable claim’ chargeable @28% w.e.f. October 01, 2023. Short of options, the platforms and other industry stakeholders preferred various petitions at HC and SC levels against the same. The SC is now entrusted with the ultimate fate of these online real money gaming companies. The matter has been scheduled for May 01st and 02nd of 2024 and will be possibly the last hope for such companies seeking a relief.

Period Covered: Apr 01, 2024 to Apr 07, 2024