53rd GST Council Meet: Here's What You Can Expect

After eight months, the Goods and Services Tax Council will convene on June 22 to deliberate on key indirect tax priorities, ranging from industry clarifications to likely subjects like tax demand notices for gaming companies.

The meeting also gains precedence as the first council meeting after the NDA government secured a third-term win in the Lok Sabha elections in 2024, as well as the meeting's timing ahead of the July 2024 budget.

Among the various expectations, the industry is hoping for technical clarity on the applicability and valuation of the tax levy on corporate guarantees and ESOPs given to employees. The last council meeting set the tax levy on a corporate guarantee from a parent company to a subsidiary company at 18% GST on 1% of the guaranteed amount or the actual consideration, whichever is higher.

The industry also expects a review of the fertiliser levy to reduce or correct the inverted duty structure, in which the GST on input items is higher than the GST on the finished product.

Currently, fertiliser attracts 5% GST, while key inputs such as ammonia (used in the production of P&K fertiliser) and packaging material attract 18%, leading to an inverted duty structure where the input tax is higher than the output tax of the final product. Similarly, some fabrics and yarns attract 12% GST, while the final product attracts 5% GST.

After reconstituting late in 2023 under Suresh Kumar Khanna, Uttar Pradesh's Finance Minister, the GST council's GoM (group of ministers), a smaller body on rate rationalisation, has yet to deliver its report. It is expected that some rate reductions recommended by the fitment committee may be taken up.

However, the rationalisation of the rate slabs in terms of reducing the number of slabs will be a longer exercise. Currently, there are four slabs beyond the nil rate, such as 5%, 12%, 18% and 28%.

The meeting also marks a key point for a review of the GST levy on online gaming, if taken by the council, as this was expected to happen six months after the 52nd meeting in October 2023, where the members agreed to levy 28% GST on online gaming, horse racing and casinos at the entry point.

Since the implementation of the 28% GST on online gaming, Sanjay Malhotra, the government's revenue secretary, told NDTV Profit in an interview in February that the revenue from online gaming companies in FY23 was forecast at Rs 1,600 crore, indicating an annual jump of Rs 12,000 crore for FY24 estimates.

The expectation of including petroleum products has also gained momentum ahead of the GST Council meeting. However, the central government has often maintained that the inclusion of petroleum products within the GST ambit will be a subject that requires state-level consensus across the board.

To be sure, even the topics on the agenda would be taken up by the GST Council based on factors like relevance, special requests by members, paucity of time and order of importance at the discretion of the head or chair of the council (the Union Finance Minister).

It would also be key to see if the council renders any clarity on the operational dates of the GST Appellate Tribunals. In May, Sanjaya Kumar Mishra took oath as the first President of the GST Appellate Tribunal in New Delhi.