With the Interim Budget round the corner and in the run-up to the general elections, there is rising demand for sector-specific committees to resolve issues pertaining to the goods and services tax (GST), thanks to the varied nature of industries that contribute to the indirect tax kitty of the government.
Pratik Jain, partner at Price Waterhouse & Co LLP, said at the Moneycontrol Policy Next panel on January 18 that since the issues for e-commerce and online gaming are completely different from those faced by the power sector or the real estate, the government needs to focus on bringing in more clarity in the GST regime.
Jain's views found an echo in former Central Board of Indirect Taxes (CBIC) member V Rama Mathew. "One of the challenges is the multiplicity of slabs and rate rationalisation. Although the GST Council has recognised it and set up a rate rationalisation committee, unfortunately it is yet to submit its report," she said.
GST, which was rolled out on July 1, 2017, is a unified indirect tax system that replaced a plethora of central and state levies such as value added tax, central excise duty, service tax and other local levies. The indirect tax regime has several tax slabs, varying from 0 percent to 28 percent (maximum).
Some goods such as fuel (diesel and petrol), jet fuel and alcohol have been kept out of the GST ambit.
Weighing in on the debate of a simpler GST rules, Lakshmikumaran & Sridharan Founder and Managing Partner V Lakshmikumaran said that while all applauded the advent of the GST, we must also realise that the law that has been written can't be understood by the people at large.
"We need a mechanism so that a small and medium enterprise wanting to be tax compliant does not need to run to experts to understand the GST law. The CBIC and the government should come out with more FAQs to explain the law and simplify it for the larger public," V Lakshmikumaran added.
Jain of PwC said that although the GST has achieved simplicity and transparency, more work needs to be done on the area of certainty to resolve the issues emerging out of different and contrasting interpretation of the law.
The former CBIC member added that the high court should not be the first court of appeal for interpretational issues pertaining to the indirect tax regime and that we need GST tribunals to make calls on these issues.
The issue interpreting GST laws has been in the news of late, after the GST council amended the indirect tax law to clarify that all online games involving wagers, irrespective of whether they are based on skill or chance, will attract a GST of 28 percent on the full value of the bets placed, and not on the gross gaming revenue (GGV), from October 1, 2023.
Many online gaming companies since received a flurry of tax notices for evading dues for the period before October 1, 2023, sparking a debate on the interpretation of the law.
Previously, online gaming companies were paying 18 percent GST on platform fees for skill-based games, while betting and gambling fell under the 28 percent slab. The provision under the GST law on taxing betting and gambling is now being invoked in the case of online gaming platforms, regardless of whether the games are of skill, or of chance (like gambling).
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