GST, which means ‘Goods and Service Tax’, has replaced the age-old multi-layered tax system in India. The idea was simple: to make the taxation process unified, more transparent and easy to function quite alike other advanced nations in the world.
The government regularly conducts GST council meetings in order to revise the GST rates according to various economic situations in the country and global economic milieu. In the 39th GST council meeting on March 14, 2020, presided by Finance Minister Nirmala Sitharaman, several key decisions were taken.
The significant outcome is the increase of GST on mobile phones and its components, apart from numerous reforms and alterations to the existing rates. These changes would definitely affect the whole country from big industries to a common household in the context.
We take a closer look at gambling and motorcycles because of the unclear approach towards the reformation of GST rates for these specific categories.
GST On Lotteries
In the 38th GST council meeting, held on December 18, 2019, the tax slab for lotteries increased considerably to 28% for both state-authorised and state-run entities. And it is believed that this uniform rate will prevail across the country for the time being until the next altercation.
No Relief For Gamblers
The freshly introduced tax rule in our country is still in its fledgeling days, and therefore tax rates covering earnings on casinos are quite blurry at the moment. Casinos fall under the category of luxurious gaming in India, and thus taxes are controlled through the existing rates and not by the enhanced GST measures.
On the other hand, there is no detailed reference of taxing online gaming under the old gaming regulation. Although the rate of taxation for gambling has been changed over the years, the rate which is being applied now is 30% on all kinds of casinos, poker games, races, and all kinds of betting or gambling activities within the country.
For offshore gambling or winning on casinos, things are different though. Because of its complexity to impose taxation rules, a certain amount will be deducted from the winning amount when it will be brought to the context of the Indian economy.
Lack Of Transparency On Earnings
In common practice, royalties and earnings from betting, casinos and gambling are subsumed at the state level.
Whether it falls under GST or not, the rate of taxation often moves around from 28 to 30%, leaving no room for clarity in the process. Even government officials and tax collectors themselves being confused about GST calculation and online gst payment.
Since GST in India is still in the developing stage, the rules for taxation and implementation on the gambling sector are still quite blurry. Thus, gamblers must prepare to lose winning money on any proportion until it is delivered as the final pay-out.
GST On Motorcycle
According to the GST system implemented, based on different slabs, motorcycles are categorised on the highest GST slab, which is not good news for bike enthusiasts.
Motorcycles under 350cc are to be taxed at 28%. Motorcycles above 350cc will be charged 3% extra as additional cess over the base tax of 28%. This will increase the cost of motorcycles’ on-road price overall.
Therefore, desired models like Bajaj Dominar 400 or KTM Duke 390 will become dearer for motorcyclists who prefer higher cc engines.
Increased Service Charge
In addition, an increase in the on-road price of the higher cc motorcycles will lead to a higher cost of spare parts. As a result, servicing will incur more expenses for bikers after the purchase.
Spare parts will be charged at a rate of 28% GST, so the labour charge will also add on to your final billing after the servicing session of your motorcycle. That’s not all – even the cost of electric vehicles is to increase because of high GST rates.
Low Accessibility To Masses
The cost of motorcycles will keep on increasing because of mandatory rules of anti-lock brakes (ABS) and combined braking system (CBS) to be provided with the vehicles. Further, with the implementation of BS stage VI in 2020, prices will go further up.
Since the government categorises motorcycles and scooters as luxury goods, the major two-wheeler brands are asking the government to specifically change the category for two-wheelers and reduce the existing GST rates to make them more viable to the common masses.
GST Tax Slabs In India 2020
At present, there are four distinct types of gst slab rates in India:
Tax Slab: 5%
Under this slab, the basic good and items are being sectioned, such as oil and spices, tea, sugar and coffee, life-saving drugs, fertilisers, and many more.
The services which fall under this slab are hotel rooms under 7,500, railways, restaurants and airways.
Tax Slab: 12%
Products like processed foods, umbrella, ghee, cheese, and butter, fruits juices, sewing machine, and services like business class flight tickets fall under this slab.
Tax Slab: 18%
Safety glass, pastries, pasta, hair oil, shampoo, mineral water, ice cream, clothing, wristwatches, furniture, mattress, video games, stationery items, scents, detergent, washing machine, cutlery, etc. fall under this GST tax slab.
Moreover, services like hotels above Rs 7500 movie tickets above 100 are also being taxed under this category.
Tax Slab: 28%
Under this tax slab, more than 200 products are being charged like two-wheelers, spare parts, cars, cement, consumer durables, cigarettes, and others.
On the other hand, the services which fall under this category are betting and gambling, racing, and others.
No Tax Slab
Sanitary napkins, newspapers, salt, eggs, bread, honey, flour, besan, handloom, bangles, kajal, manuscripts, etc. do not fall under GST tax slabs.
Services like savings account charges, hotel tariffs under Rs 1000, IMM course books and others are also exempt from GST.
Final Words
In summary, the new GST was implemented to bring transparency in the tax accounting process and make things easy for the consumers and common masses. However, in some instances, GST hasn’t solved the problem – instead, it has increased it in manifolds.
And who knows that better than gamblers and motorcyclists, who both fall under the highest tax slab of 28%. However, market prices are never constant and keep on decreasing or increasing on a daily basis. Therefore consumers, in this case, gamblers and bikers, need to be extra careful while visiting a casino or purchasing a new motorcycle.
