GST Council Meeting: Expectations for Price Changes on Goods and Services

Synopsis: The GST Council meeting on June 22, 2024, chaired by Finance Minister Nirmala Sitharaman, will address key issues such as the 28% GST on online gaming, potential tax reductions on chemicals and fertilizers, and the inclusion of fuel under GST. Experts anticipate significant discussions on rate structures and industry-specific clarifications.

The upcoming GST Council meeting, scheduled for June 22, 2024, marks the first gathering after an eight-month hiatus. The 52nd GST Council meeting, which occurred on October 7, 2023, addressed the imposition of a 28% levy on online gaming, casinos, and horse racing. Today's meeting, presided over by Union Finance Minister Nirmala Sitharaman, has several key topics anticipated to be discussed, although the agenda remains officially undisclosed.

Key Expectations from the GST Council Meeting

Online Gaming

The government may revisit the 28% GST on the full face value of bets in the online gaming industry. Despite the approval of amendments to GST laws in July and August 2023, which categorized online gaming, casinos, and horse racing as taxable actionable claims, the sector has faced significant tax liabilities, amounting to approximately Rs 2 trillion. This issue has been contested in court, with the Supreme Court set to review the petitions in July. The GST Council could either await court guidance or proactively amend the contentious retroactive enforcement of the 28% GST.

Chemicals and Fertilizers

The Council might consider the Standing Committee on Chemicals and Fertilizers' February recommendations to lower GST on nutrients and raw materials to benefit fertilizer manufacturers and farmers. Currently, fertilizers are taxed at 5%, while raw materials like Sulphuric Acid and Ammonia are taxed at 18%. Previous proposals to reduce these rates were discussed in the 45th and 47th meetings but did not result in changes.

Inclusion of Fuel under GST

Discussions about bringing fuel under the GST ambit have been ongoing, with the aim of creating a consistent pricing structure for essential energy resources. States have resisted this move due to concerns over revenue loss. Integrating fuel into GST could potentially reduce prices, as the highest GST rate is 28%, compared to the dual taxation system of central excise duties and state-level VAT currently in place.

Expert Opinions and Anticipations

Ranjeet Mahtani, Partner at Dhruva Advisors, highlighted that the GST Council is expected to address multiple issues such as rate structure overhaul, rate rationalization, and the inverted duty structure in sectors like pharmaceuticals and textiles. There is also anticipation for further clarifications on the newly introduced GST on corporate guarantees and a definitive stance on the multiplicity of proceedings by different tax authorities under the GST regime.

Shivam Mehta, Executive Partner at Lakshmikumaran & Sridharan Attorneys, mentioned the ongoing discussions about including various petroleum products under GST. The outcomes of these discussions depend significantly on the Centre's ability to align with the states' interests.

By addressing these topics, the GST Council aims to refine the tax structure, ensure fairness across sectors, and potentially bring relief to industries and consumers alike.