GoM meet on May 2 to decide on GST issues in casinos, online gaming, and horse racing

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The Group of Ministers (GoM) constituted to examine the GST issues in online gaming, casinos, and horse racing is set to meet on May 2, GoM member and Goa minister Mauvin Godinho said. The minister said there have been representations that they should be taxed as per gross gaming revenue and the GoM will adopt the best practice. The GoM is presently headed by Meghalaya Chief Minister Conrad Sangma,

The Union Finance Ministry constituted the GoM in May 2021 to look into GST-related matters related to casinos, race courses and online gaming. In February 2022, the GoM was reconstituted. The reconstitution is necessitated as the earlier convenor Nitin Patel was dropped from the Gujarat’s Council of Ministers in September last year. The then Home Minister and present Chief Minister of Karnataka, Basavaraj Bommai, and Deputy Chief Minister of Arunachal Pradesh, Chowna Mein, are no longer part of the group. Finance Minister of Uttar Pradesh, Suresh Khanna, is the new member, while the Finance Minister of Gujarat, Kanubhai Patel, has replaced Nitin Patel. Similarly, Chandrima Bhattacharya replaced Amit Mitra as the representative of West Bengal.

Earlier in October 2021, the GST Secretariat had asked the GST Council to provide clarity on the GST rate and the applicability of the levy on the services related to online gaming, casinos, and horse racing. This followed a recent directive dated September 29 from the Punjab Haryana High Court (PHHC) on the matter. The PHHC had directed the GST department to take no coercive action on an online gaming company against the demand notices until the Group of Ministers (GoM) constituted to examine the issues provides clarity. This is the second change in the composition of the present group, which was constituted on May 24 last year. Interestingly, the group is yet to meet even once since the constitution. The GST rate applicable on online games involving betting or gambling is 28 per cent, and the GST rate applicable on games not involving betting or gambling is 18 per cent.

Earlier, the Group of Ministers on lottery, formed in January 2019, in its report mentioned that it received miscellaneous representations similar to lottery. It recommended that the rate and valuation issues of casinos, horse racing, online gaming and betting may be referred to the Fitment/Law Committee, and then taken to GST Council, either directly or through GoM as approved by the Union Finance Minister.

Later, the issue figured prominently in the 35th and 37th GST Council Meeting held on June 21, 2019, and September 20, 2019, respectively. In the September 2019 meeting, the Fitment Committee (a sub-committee of the council comprising officials to prepare recommendation on rate proposals) considered a proposal for reducing GST to 18 per cent from 28 per cent on wagering in horse racing, besides excluding prize money from the taxable value of horse racing but deferred the decision.