The all-powerful Goods and Services Tax (GST) Council on Tuesday decided to impose a 28 per cent tax on the turnover of online gaming companies, horse racing and casinos.

The panel, headed by the Union finance minister and comprising of representatives of all states and UTs, also lowered the service tax levied on food and beverages consumed in cinema halls to 5 per cent and tweaked the definition of an SUV for attracting a cess over and above the GST rate.

Union finance minister Nirmala Sitharaman said presently the definition of an SUV for levy of cess includes four parameters -- should be popularly known as SUV, should be of length of 4 meters or above and engine capacity of 1,500 cc and above, and unladed ground clearance of minimum 170 mm.

Now, the SUV definition will include only the length (4 meters and above), engine capacity (1,500 cc and more), and ground clearance (unladed clearance of 170 mm and more), she said.

On the tax levied on food and beverages served in cinema halls, the GST Council decided to levy 5 per cent GST, equivalent to the tax on restaurants, and not 18 per cent as is applicable on cinema halls.

She said the panel decided to levy a 28 per cent GST on the face value or paymens made for playing online games, bets in casinos and on racing.

The tax rate was decided based on the recommendation of a group of ministers that looked at taxing casinos, horse racing and online gaming.

The issue before the GoM (group of ministers) was whether to impose a 28 per cent GST on the face value of bets, or gross gaming revenue, or just on platform fees.

Sitharaman said the tax will be levied on the entire value.

The tax on online gaming companies would be imposed without making any differentiation based on whether the games required skill or were based on chance.

To concerns of the gaming industry that tax on entire value would kill the industry, she said, "we are not killing any industry" but gaming and gambling cannot be given a treatment lesser than essential industry.

"So the moral question was also discussed (at the Council meeting on Wednesday). It does not mean they be promoted more than essential industries," she said.

The GST Council also decided to exempt cancer fighting drugs and medicines for rare diseases from the levy, she said.

Also, GST on satellite launch services provided by private operators has been exempted, she added.

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