There has been a broad consensus among the Group of Ministers (GoM) set up to look into the tax rate on casinos, online gaming and race courses. to levy a flat rate of 28 percent on these services under the Goods and Services Tax (GST) regime.
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West Bengal Finance Minister Chandrima Bhattacharya said the panel has directed officials to look into the modalities of assessment for levying tax, after which the panel will have its final meeting by mid-May.
“There is a consensus among the states that [on] All three – online gaming, casino and horse racing – should be taxed at the highest of 28 percent. Now the question is what will be the valuation on which tax will be levied. For this, a team of officers of the Fitment Committee will look into the financial aspect, the legal aspect and will give a report in 10 days. Then again in mid-May another meeting will be called by the chairman (of the GoM),” said Bhattacharya, who is a member of the GoM. Indian Express,
Thereafter, the GoM will finalize the manner of evaluation of these services. At present, online gaming (without betting) attracts 18 per cent GST, while those associated with gambling, betting with race clubs attract 28 per cent GST. Now, a higher duty of 28 per cent is likely to be levied on all categories.
The government had in May last year set up a GoM for better evaluation of services of casinos, online gaming portals and race courses for levying GST. The terms of reference for the committee include evaluating the services provided by casinos, race courses and online gaming portals, and the taxability of certain transactions in casinos, taking into account the existing legal provisions and orders of courts on related matters. .
The committee was to suggest the need for any changes in legal provisions to have an effect on the adoption of better means of evaluating the services of casinos, race courses and online gaming and other similar services such as lotteries.
The GoM, chaired by Meghalaya Chief Minister Conrad Sangma, met on Monday (May 2) and discussed the GST rate applicable to these three services. The report of the GoM is likely to be considered in the next meeting of the GST Council to be held later this month.
Other ministers of state in the 8-member GoM include Maharashtra Deputy Chief Minister Ajit Pawar, Gujarat Finance Minister Kanubhai Patel, Goa Panchayati Raj Minister Mauvin Godinho, Tamil Nadu Finance Minister P Thiaga Rajan, Uttar Pradesh Finance Minister Suresh Khanna and Telangana Finance Minister T. Harish Rao.
28% tax on these services
State government officials estimate that gaming services will generate a turnover of Rs 30,000 crore annually.
The Group of Ministers on Lotteries, which was constituted in January 2019, recommended in its report that the rates and valuations of casinos, horse racing, online gaming be referred to the fitment and legislation committees.
This topic was featured in the 35th GST Council meeting in June 2019 and 37th Council meeting in September 2019.
In the June meeting, the agenda listed a proposal on the need to define the value for these services for taxation, defining the methodology and procedure for fixing the face value and condition amount and submitting it to the Law Committee and the Fitment Committee. Referencing is included.
At its September 2019 meeting, the Fitment Committee considered a proposal to reduce wagering in horse racing from 28 percent to 18 percent, along with excluding prize money from the taxable value of horse racing. The fitment committee recommended GST at the rate of 28 per cent along with a compensation cess of 115 per cent on betting in horse racing, making the effective rate of taxation on face value 18 per cent.
In December 2019, the GST Council imposed a uniform 28 per cent GST on both state-run and state-authorized lotteries. Earlier, state-run lotteries attract 12 per cent GST, while state-authorised lotteries attract 28 per cent GST.
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