Finance Minister Nirmala Sitharaman stated today that the 28% GST on full face value on online gaming, casinos and horse racing will lead to higher revenue. The Finance Minister was replying to a host of questions asked in the Rajya Sabha by Retired Lt. General and BJP member D.P. Vats relating to GST levy on the above three supplies.
To begin with, Vats asked about the current size and market value of the online gaming industry in India. Sitharaman revealed that according to NITI Aayog estimates the sector reached $1.9 billion in 2021, growing by 28%.
Talking about the projected revenue collection that the government is aiming to achieve by imposing the 28% GST rate on the aforementioned three supplies, the Finance Minister revealed that the casinos are currently paying 28% GST on gross gaming revenue (GGR) while the online gaming industry and some horse race clubs are paying 18% GST on platform fees/commission which is charged in the range of 5% to 20% of full face value.
On the other hand, other horse race clubs, the FM said, were paying GST at 28% on full face value. Sitharaman also said that online gaming companies and some horse race clubs were disputing the 28% rate levy. She added that the new rate will result in higher revenue collection from current levels.
Vats, lastly, asked if there was any specific reasoning behind imposing the 28% rate and its potential impact on the growth and revenue generation of the three sectors.
The FM replied that the GST rate and exemption are decided based on the recommendations of the GST Council which consists of members from central and state/UT governments who together recommended 28% GST on actionable claims in the form of betting and gambling.
Sitharaman added that a Group of Ministers was formed by the Council which held elaborate stakeholder consultations and examined the impact on the aforementioned sectors, submitting its report recommending a 28% rate. Based on the recommendation, the GST Council, in its 50th meeting on July 11, decided upon the 28% rate on full face value.