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GST Council to vet verification plan for high-risk taxpayers

The GoM on system reforms has also recommended mandatory biometric authentication for high-risk taxpayers along with use of artificial intelligence to prepare reports detailing risky behaviour of such taxpayers.

Written by Aanchal Magazine | New Delhi |
Updated: June 28, 2022 7:06:11 am
These steps, along with another ministerial panel’s recommendation to levy 28 per cent GST on online gaming, casinos and horse racing, are expected to be discussed in the upcoming GST Council meeting on June 28-29. (Representational)

Verification after registration for high-risk taxpayers under Goods and Services Tax (GST), along with use of geo-tagging and physical verification, are some of the measures suggested by a Group of Ministers (GoM) on system reforms. These steps, along with another ministerial panel’s recommendation to levy 28 per cent GST on online gaming, casinos and horse racing, are expected to be discussed in the upcoming GST Council meeting on June 28-29.

The GoM on system reforms, chaired by Maharashtra Finance Minister Ajit Pawar, has also recommended mandatory biometric authentication for high-risk taxpayers along with use of artificial intelligence to prepare reports detailing risky behaviour of such taxpayers. Verification of electricity bill details and bank accounts will also be used as a source for identifying these high-risk taxpayers, sources said.

The other ministerial panel on gaming and casinos, headed by Meghalaya Chief Minister Conrad Sangma, has recommended that no distinction should be made in these activities merely on the ground that an activity is a game of skill or of chance or both. As per the estimates shared by Federation of Indian Fantasy Sports to the GoM, the online gaming sector’s market size is around Rs 34,600 crore.It has also suggested that online gaming should be taxed at full value of the consideration, including contest entry fee paid by the player on participating in the game. In case of race courses, the GoM has suggested that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers.

For casinos, the GoM is learnt to have recommended that the tax would be levied on the full face value of the chips/coins purchased from the casino by a player. No further GST would apply on the value of bets placed in each round of betting, including those placed with winnings in previous rounds, sources said.

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The GoM is also learnt to have suggested that 28 per cent GST be levied on entry/access fees into casinos, which compulsorily includes foods/beverages etc. But, optional supplies, made independently of the entry tickets, would be taxed at the rate applicable on such supplies, sources said. At present, online gaming (without betting) attracts 18 per cent GST. Now, all categories are likely to attract a higher levy of 28 per cent. The Council will also discuss rate hike suggestions from the fitment committee for items such as cut and polished diamonds and tetra packs; and rate cut for ropeway cable and ostomy appliances, including waterproof pouch for collecting waste from the body. Also, a clarification would be issued on GST rates on electric vehicles, to state that EVs, whether fitted with batteries or not, would attract 5 per cent tax. The fitment commitee had also clarified that Nicotine Polacrilex Gum, which is commonly used to aid in smoking cessation in adults, attracts 18 per cent GST. On the issue of taxation of virtual digital assets including cryptocurrency, the fitment committee has recommended deferring the decision and suggested that states of Haryana and Karnataka shall study all aspects and submit a paper in due course.

The committee, which includes officials from both states and Centre, gives its recommendation regarding tax rates, after receiving demands from stakeholders, in almost every meeting of the Council. This time around it has suggested the status quo for over 215 goods and services.

Rate rationalisation measures under GST are being considered as the compensation regime — under which states were offered compensation for revenue loss below the guaranteed compounded 14 per cent rate — comes to an end in June after five years of the rollout of the indirect tax regime.

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First published on: 27-06-2022 at 01:29:47 am

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