Key Issues Highlighting the Need for Review of GST Framework

• Issues of MSMEs: Struggle with compliance due to complexity of Inverted Duty Structure and administrative burden.
• Issues of Exporters: Face delays in input tax credit (ITC) refunds, causing cash flow issues and reducing global competitiveness.
• Issues of steel rolling mills: Pay dual taxes as scrap dealers evade GST (thus, hindering ITC claims by mills); some businesses relocate to states with GST relaxations.
• Tax evasion by Online Gaming Sector: Despite recent amendments to the GST law targeting this sector, tax evasion persists due to varied business models. 
  • From October 1, 2023, online gaming is taxed at 28% GST. 
  • Suppliers of online money gaming must register under the Simplified Registration Scheme of the IGST Act.
  • The Directorate General of GST Intelligence (DGGI) can direct intermediaries to block unregistered offshore gaming platforms violating the IGST Act.

Way ahead

• Simplified GST compliance framework specifically designed for MSMEs, 
• Dedicated fast-track refund processing system for exporters, ensuring that ITC claims related to exports, 
• A detailed independent study to understand the revenue streaming models adopted by various gaming platforms and accordingly develop a comprehensive guidelines specifically tailored to the online gaming sector.