How are the new GST changes going to impact you?

<ul><li>Many everyday use products -- from pens to cartons, bags, plastics and cards, stand to get dearer as the government looks to merge the 12% and 18% <keyword id="6354679" type="General" weightage="20" keywordseo="gst" source="Orion">GST</keyword> rates.</li><li>The biggest reason for such rationalisation is correction in the <keyword id="2307968" type="General" weightage="20" keywordseo="inverted-duty" source="Orion">inverted duty</keyword> structure that leads to difficulties in claiming the net input tax credit.</li><li>The government is likely to move to just <keyword id="12151525" type="General" weightage="20" keywordseo="two-tax-slabs" source="Orion">two tax slabs</keyword> of 5% and 18% over the next 6-18 months.</li></ul>The Indian government wants fewer tax slabs under the goods and services tax (GST) regime. Recently, <keyword id="82366" type="General" weightage="20" keywordseo="chief-economic-advisor" source="Orion">Chief Economic Advisor</keyword> K V Subramanian said that GST could be turned into a three-rate structure by merging two existing tax slabs. However, experts say that it could also be down to just two slabs, eventually. And the latest move to increase the GST to 18% on pens, cartons, bags, plastics and cards, is part of that plan. Though fewer slabs will make it easier for businesses to pay taxes, it could lead to some key products and services getting more expensive and that is an issue, which the government must be wary of. <cmsannotation type="cmsannotation" annotationid="Current GST Rate Slabs" comment="subhead" text="Current GST Rate Slabs">Current GST Rate Slabs</cmsannotation> <table style="border-width: initial; border-style: none;" class="redcator-table-advance"><colgroup></colgroup><col /><col /><tbody><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Goods </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Services </td></tr><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">0% </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">0% </td></tr><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">0.25% </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">3% </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">12% </td></tr><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">5% </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">18% </td></tr><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">12% </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">28% </td></tr><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">18% </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">28% </td><td style="border-left:solid #cccccc 0.75pt;border-right:solid #cccccc 0.75pt;border-bottom:solid #cccccc 0.75pt;border-top:solid #cccccc 0.75pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>In the 45th GST Council meeting held on Friday last week, some products that were earlier taxed at 5% or 12%, including cartons, boxes, bags, packing containers of paper, plastic products, metal ores, scented sweet supari, cards, catalogue, and printed material, were moved to 18%, along with other products. Most of these everyday items are used by even those who are not financially well off. And a higher tax is the last thing they need. “What is the logic of taxing them [cardboard boxes] at 18%. Except for rationalisation, I cannot think of any other reason for change in these rates,” said <keyword id="3809784" type="General" weightage="20" keywordseo="sandeep-chilana" source="Orion">Sandeep Chilana</keyword>, managing partner at Chilana &amp; Chilana Associates. Some rates, however, such as for retro fitment kits for vehicles used by the disabled, fortified rice kernels, medicine Keytruda for treatment of cancer and biodiesel supplied to oil marketing companies, among others, were reduced to 5%. <cmsannotation type="cmsannotation" annotationid="Here’s why having fewer tax slabs is good" comment="subhead" text="Here’s why having fewer tax slabs is good">Here’s why having fewer tax slabs is good</cmsannotation> The development comes as the government looks to move to a twin-tax structure under the GST regime, <keyword id="136087" type="General" weightage="20" keywordseo="bipin-sapra" source="Orion">Bipin Sapra</keyword>, tax partner at advisory firm EY told Business Insider India in a video interaction. The biggest reason for such rationalisation, he said, is correction in the inverted duty structure that leads to difficulties in claiming the net input tax credit. An inverted duty structure is a situation where inputs or raw materials are taxed higher than the output or finished products for sale. “But ultimately your product is becoming costlier at some point because once the (input tax) credit gets utilised, what is the net amount of tax that you have added to the product, would need to be seen,” said Sapra. He also expected more such rationalisations to happen in the future. At present, GST is levied under five slabs for services, and under seven slab rates for goods, with the tax on gold that is kept at 3% and rough precious and semi-precious stones that are placed at a special rate of 0.25% under GST. But that may change soon as the government is likely to move to just two tax slabs of 5% and 18% over the next 6-18 months, said Sapra. “We will see more of this happening in the coming days, because they [the government] are ultimately trying to move to two rates of 5% and 18%,” he said. So, most of the items in the 12% GST rate category are likely to move up to 18%, while some may be brought down to 5%. “But, predominantly, whatever we see at 12%, based on the discussions I have had with policymakers, will ultimately move to 18%. That is the broad reason why we are seeing this. My view will be within 6-18 months, we will move to a two-rate regime,” he said. Further, moving certain products to the higher 18% tax slab also seems unfair to customers and businesses during the pandemic, said <keyword id="107827" type="General" weightage="20" keywordseo="anita-rastogi" source="Orion">Anita Rastogi</keyword>, partner - GST and indirect taxes at PwC. “I do not think 18% is the right rate, if we want to do a two-slab rate. It should either be 15% or 16%, because 18% is not the genuine correct rate in today’s scenario,” she said. “There are a lot of factors that need to be re-considered post the pandemic, [such as] the situation in which the businesses are and also the purchasing power of the people. So, if at all the rate fitment committee is discussing it, we really need to urge them to relook at the rates at which they want to do it.” <keyword id="3063029" type="General" weightage="20" keywordseo="abhishek-rastogi" source="Orion">Abhishek Rastogi</keyword>, partner - indirect taxes at law firm Khaitan &amp; Co., concurred. “16% is ideal. There may be some anti-profiteering issues coming down from 18% to 16%, but 16% is the best rate. If that rate doesn’t suit in terms of revenue, then 5% can go up to 6%,” he said. Since the rationalisation for change in the rates was not given by the GST Council, Sapra said that it would be helpful if the committee came up with a vision statement to give more clarity to businesses, instead of doing patchwork to solve the issues of tax cascading, inverted duty structure and perceived revenue loss. “Right now, we believe that the GST council is doing what it needs to (do) to keep the GST running and solve the problems the industry or state governments throw at it, but we need more clarity and vision from the GST council,” he said. SEE ALSO: <a href="https://www.businessinsider.in/cryptocurrency/news/south-koreas-crypto-regulations-are-tightening-around-investors-and-exchanges-alike/articleshow/86426452.cms">South Korea’s crypto regulations are tightening around investors and exchanges alike</a> <a href="https://www.businessinsider.in/stock-market/news/paras-defence-and-space-technologies-ipo-gets-blockbuster-demand-from-investors/articleshow/86422668.cms">Paras Defence and Space Technologies IPO gets blockbuster demand from investor</a> <a href="https://www.businessinsider.in/business/news/experts-say-karnatakas-ban-on-games-of-chance-like-dream11-and-mpl-may-face-a-legal-test/articleshow/86419697.cms">Experts say Karnataka’s ban on games of chance like Dream11 and MPL may face a legal test</a>

It’s good that India wants just two GST slabs⁠ but it has to ensure it doesn’t hurt consumers

<ul><li>The Karnataka government bans online "games of chance".</li><li>As the IPL season has kicked in, Dream11, My11Circle, MPL Pro, Bet365, Gamezy and many others gaming platforms can come under the radar of Karnataka’s ban on online ‘game of chance’.</li><li>The offence under the law will lead to a prison term of up to three years and fine of up to ₹ 1 lakh.</li></ul>The Karnataka government on Tuesday <a href="https://economictimes.indiatimes.com/tech/technology/karnataka-assembly-passes-bill-banning-online-games-of-chance/articleshow/86407014.cms">reportedly</a> passed a bill that bans online "games of chance”. Karnataka Chief Minister Basavaraj Bommai reportedly said that the government will deal with gaming operators who run “games of chance” camouflaged as “games of skill”. Even those skill games that involve the risk of the player losing money would invite action under the law, he said. However, there is not enough clarity on which games are considered under “game of skill” and “game of chance”. As the Indian Premier League (IPL) season has kicked in, online gaming firms like Dream11, My11Circle, MPL Pro, Bet365, Gamezy and many others can come under the radar of Karnataka’s ban on online ‘game of chance’. Operating such games, sheltering such operations, and abetting and participating in such online games both cognisable and non-bailable is an offence, according to the bill. The offence will lead to a prison term of up to three years and fine of up to ₹ 1 lakh. So far, Punjab, Haryana, Bombay and Rajasthan High Courts have given <a href="https://economictimes.indiatimes.com/tech/startups/supreme-court-upholds-dream11-fantasy-sports-format-as-game-of-skill/articleshow/85040855.cms">verdict </a>supporting online gaming platforms like Dream11 and considers it as a “game of skill”. The Karnataka government has gone ahead with the ban despite the Supreme Court’s <a href="https://m.economictimes.com/tech/startups/supreme-court-upholds-dream11-fantasy-sports-format-as-game-of-skill/articleshow/85040855.cms">decision </a>that favoured the fantasy gaming industry, calling them skill gaming instead of gambling. Priyank Kharge, former information technology (IT), tourism and social welfare minister of Karnataka, batted against a blanket ban for all online games. “The government should form a committee with industry stakeholders and come out with a law that curbs online betting instead of a bill that won’t stand the test of law,” he said in a tweet. <div type="javascript" title="Custom" contenttype="Text"><cdata><![CDATA[<blockquote class="twitter-tweet">The Karnataka Police (Amendment) Bill, 2021 has not been thought out by the Govt. If it intends to ban gambling/betting it should distinguish between a game of skill and a game of chance, which is not reflected in the bill. 1/n&mdash; Priyank Kharge / ಪ್ರಿಯಾಂಕ್ ಖರ್ಗೆ (@PriyankKharge) <a href="https://twitter.com/PriyankKharge/status/1440347775464476685?ref_src=twsrc%5Etfw">September 21, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>]]></cdata></div> Kharge mentioned Karnataka is the gaming hub with investments of ₹4,000 crore employing thousands of people. The former minister further added that more clarity is required on certain of these issues because these are buzzing businesses. “They (online gaming platforms) are run by very young players (individuals) who have just graduated from colleges and it will kill them at this stage. Tax certainty is required as you cannot tax the entire thing, just because you feel that there is revenue which can be collected from these activities,” said Abhishek A Rastogi, partner at Khaitan &amp; Co in a Twitter live session with Business Insider on Monday. <div type="javascript" title="Custom" contenttype="Video"><cdata><![CDATA[<blockquote class="twitter-tweet">GST Changes: How are they going to impact the consumers? <a href="https://t.co/cnHeeLwZ8t">https://t.co/cnHeeLwZ8t</a>&mdash; Business Insider India🇮🇳 (@BiIndia) <a href="https://twitter.com/BiIndia/status/1439855671793516549?ref_src=twsrc%5Etfw">September 20, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>]]></cdata></div> In the same conversation, another panelist, Sandeep Chilana, managing partner at Chilana &amp; Chilana Associates, said that there will be legal challenges by these online gaming entities in the court after the ban. “In the online gaming casino sectors, and the entertainment sector everything is charged under different categories of rates. So I'm saying, gambling betting is one thing, but if you see a serious casino business, you are charging me the royalty, the licence fee to operate the casino, you are charging GST [goods and services tax] on that also, then you are asking for the 20% tax only even if it's a slot machine,” said Rastogi. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tonetag-backed-by-amazon-and-mukesh-ambani-is-ready-to-go-beyond-payments-using-sound-waves-not-internet-and-smartphones/articleshow/86419124.cms">ToneTag, backed by both Amazon and Mukesh Ambani, is ready to go beyond payments using sound waves, not internet and smartphones</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/zee-entertainment-merges-with-sony-pictures/articleshow/86416420.cms">Marriage Story! Zee gets a white knight in Sony</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/irctc-indiamart-zee-entertainment-cummins-india-share-price-under-pressure-but-still-worth-buying/slidelist/86407477.cms">IRCTC, IndiaMART, Cummins India and others have been under pressure in the last 5 days but still worth buying</a>

Experts say Karnataka’s ban on 'games of chance' may face a legal test

<ul><li><keyword id="830092" type="General" weightage="20" keywordseo="zomato" source="Orion">Zomato</keyword> and <keyword id="6358977" type="General" weightage="20" keywordseo="swiggy" source="Orion">Swiggy</keyword> will be liable to collect <keyword id="6354679" type="General" weightage="20" keywordseo="gst" source="Orion">GST</keyword> on online orders of food, instead of restaurants.</li><li>We don’t tax platforms like Amazon because we understand that they are marketplaces, why such difference with food aggregators, asks EY’s Bipin Sapra.</li><li>The tax loss to the government due to alleged under-reporting by food delivery aggregators is ₹2,000 crore over the past two years.</li></ul>India’s Finance Minister Nirmala Sitharaman on Friday announced that online food delivery platforms like Zomato and Swiggy will be the ones collecting goods and services tax (GST) from customers. The tax rate stays consistent at 5% and the ruling comes into effect on January 1, 2022. Earlier, it was the responsibility of the restaurants to do the same. It did seem pretty fair though, given that restaurants were the ones actually serving the customers while these new age platforms only facilitated online ordering. But it is what it is and the tax experts are not too impressed with it. The partners of renowned law and consultancy firms agreed that taxing platforms like Zomato and Swiggy was not the right way to go about this. “Are we asking Amazon and others to pay the tax? No, because we understand that separate from where there is a buy and sell,” EY’s Bipin Sapra said, adding that food delivery platforms work in a similar manner. But before we form an opinion about it, it is important to understand what this hullabaloo is all about. ‘It’s transfer of responsibility, not an add on tax.’ A customer pays a GST of 5% on each order they place, whether for dine-in or at-home delivery. The restaurants collect this GST because it is the one providing the services/product to the customers directly. The Indian government has now decided that restaurants would not be the ones collecting the taxes on online orders accepted through apps like Zomato and Swiggy. Instead, these food aggregator businesses will be the ones doing so. “They've actually said that these electronic commerce operators would be paying the tax on behalf of restaurants that are supplying customers through their platform. It is like a transfer of responsibility. The restaurant is not required to pay that, but yes they will continue to pay the tax for the offline sales,” PwC’s Anita Rastogi said in an exclusive interaction with Business Insider. Therefore, it doesn't really have much of an implication on customers in many cases as the GST rate stays the same. In some, it does. ‘I already pay GST on order, why do I care who collects it?’ While the government of India is yet to issue further clarification on the new GST norms for Zomato and Swiggy, the current facts have actually made the platforms quite redundant. If restaurants are not supposed to collect GST on online orders, does this mean that placing an order directly from the restaurants will be cheaper than placing it through these platforms? “If I order from a dhaba [roadside restaurant] next door and there is a 5% tax that Zomato charges, but if I call him directly, I don't have to pay 5% tax... Then that brings in inefficiencies and then takes away the whole purpose of having these platforms who are pushing the smaller players to reach a bigger audience,” Chilana &amp; Chilana Law Office’s Sandeep Chilana said. Even the tax experts or the platforms themselves are not too sure about how the government plans to play it out. Both Zomato and Swiggy have <a href="https://economictimes.indiatimes.com/tech/startups/swiggy-zomato-reach-out-to-govt-for-clarity-on-gst/articleshow/86439373.cms" data-type="tilCustomLink">reportedly</a> reached out to the government, seeking more details on the GST being levied on them. They are worried that this could lead to tax cascading (tax on tax). Abhishek Rastogi, partner at Khaitan &amp; Co, also raised similar concerns. There is one thing for sure — you will have more tax on your plate now. Earlier, restaurants below certain thresholds were exempted from paying GST on online or dine-in orders. Thanks to the new policies, even those restaurants would be under the tax next and ordering from your nearest dhaba will get more expensive. ‘This is precisely why the government took this up’ Despite the increase in online ordering, the government of India has not been able to fill up its treasury at the same rate. “These restaurants were required to take the GST and pay the tax to the government, but somewhere down the line — through technology, artificial intelligence, etc — many of the restaurants are not paying this particular tax to the government,” Rastogi said. As per the <a href="https://www.business-standard.com/article/economy-policy/5-gst-on-food-delivery-apps-fuel-to-stay-out-of-ambit-key-decisions-121091701376_1.html">estimates</a>, the tax loss to government due to alleged under-reporting by food delivery aggregators is ₹2,000 crore over the past two years. ‘But is there any way out?’ “The simplest solution which can be implemented as soon as possible was tax collected at source (TCS),” Rastogi added. Tax collected at source (TCS) is the tax payable by a seller, which he collects from the buyer at the time of sale. Platforms like Zomato and Swiggy are liable to pay TCS of 1%, which highlights that the government had already taken cognisance of the issue. The experts agree that increasing the TCS was a much simpler and faster way to go about things here, instead of introducing a new tax altogether. SEE ALSO <a href="https://www.businessinsider.in/cryptocurrency/news/south-koreas-crypto-regulations-are-tightening-around-investors-and-exchanges-alike/articleshow/86426452.cms">South Korea’s crypto regulations are tightening around investors and exchanges alike</a> <a href="https://www.businessinsider.in/stock-market/news/paras-defence-and-space-technologies-ipo-gets-blockbuster-demand-from-investors/articleshow/86422668.cms">Paras Defence and Space Technologies IPO gets blockbuster demand from investor</a> <a href="https://www.businessinsider.in/business/news/experts-say-karnatakas-ban-on-games-of-chance-like-dream11-and-mpl-may-face-a-legal-test/articleshow/86419697.cms">Experts say Karnataka’s ban on games of chance like Dream11 and MPL may face a legal test</a>

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How are the new GST changes going to impact you?

Business Insider India

It’s good that India wants just two GST slabs⁠ but it has to ensure it doesn’t hurt consumers

Ridhima Saxena

Experts say Karnataka’s ban on 'games of chance' may face a legal test

Bhakti Makwana

India needs to review how it wants to extract tax from Zomato and Swiggy

Kritti Bhalla