The GST Council on Tuesday decided to levy the maximum 28 per cent tax on the full face value of bets in online gaming, casinos and horse racing, lowered the tax on food and beverages sold in multiplexes and tweaked the definition of utility vehicles for the levy.

The panel also exempted GST (Goods and Services Tax) on import of cancer drug Dinutuximab, and medicines used to treat rare diseases and food used in Food for Special Medical Purposes (FSMP), besides satellite launch services provided by private operators.

Food and beverages consumed in cinema halls will attract a GST of 5 per cent, equivalent to the levy charged in hotels and restaurants, instead of 18 per cent which in many cases the cinema halls were charging.

Section 3 of the GST Act will be amended to bring online gaming and horse racing as taxable actionable claims. The bill is likely to be introduced in the monsoon session of Parliament.

Union finance minister Nirmala Sitharaman said the definition of an SUV for the levy of cess included four parameters — should be popularly known as SUV, should be of a length of 4 metres or above and engine capacity of 1,500cc and above, and unladen ground clearance of minimum 170 m.

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

This definition will, however, not cover sedans.

Giving details of the decisions taken at the 50th Council meeting, Sitharaman said the decision to levy maximum tax on online gaming and casinos was not intended to kill the industry but considering the “moral question”, it cannot be taxed at par with essential commodities.

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.

Joy Bhattacharjya, director-general of the Federation of Indian Fantasy Sports, said the decision of the council was very unfortunate and terrible for the online gaming industry.

He said 28 percent GST is high and a killer blow for the online gaming industry and for consumers, “The consumers do not have an opportunity for the amount of money that they play with and they will get far less in return and for a game of skill as well. Start-ups in the online gaming industry will not be able to survive this tax.”

“The only side which will benefit from high taxation will be the illegal betting or gambling industry and the start-up industry in the online gaming industry will be completely wiped out,” Roland Landers, CEO of All India Gaming Federation (AIGF), said.

“It will need to be seen if the prescribed methodology to tax online gaming will pass the test of constitutionality. In any case, this cannot be implemented retrospectively,” Sudipta Bhattacharjee, partner at Khaitan & Co, said.

Abhishek Jain, national head & partner, indirect taxes, KPMG, said: “While the detailed amendment would need to be evaluated, the move for levying 28 per cent GST on full value for online gaming is much against the industry expectations.”