GoM GST to finalise 28% tax on online gaming, casinos, and horse racing: Report

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The group of ministers (GoM) constituted to examine GST rates in casinos, race courses and online gaming on Tuesday decided to stick to its earlier recommendation for a uniform 28% tax on the full value of the consideration on all the three.

The GoM, headed by Meghalaya Chief Minister Conrad Sangma, in June has recommended that online gaming should be taxed at the full value of the consideration, including the contest entry fee paid by the player on participating in the game. Later, the GST Council directed the GoM to reconsider the issue based on requests from Goa which heavily relies on gambling revenues.

The revised report of GoM is now delayed by more than three months. The initial timeline for the revised report was July 15 which was later extended to August 10.

“All the states have reiterated their earlier stance (28% tax on full value) and the view will be communicated to the GST Council in the form of a report for a decision on the matter,” West Bengal Finance Minister Chandrima Bhattacharya, who attended the Tuesday’s meeting, was quoted by FE.

West Bengal and Uttar Pradesh which are on opposite sides of political spectrum  supported GST at a uniform rate of 28% on the full value of the consideration, without making a distinction between games of skill or chance. West Bengal obtains significant revenue from lottery and is accused by opposition parties of favouring lottery lobby. The other members of the GoM include Goa, Telangana, Tamil Nadu, and Gujarat.

Reports also indicate that the GST Council might categorise actionable claim as ‘services’ by putting it under Section 7 of the CGST Act for taxation purposes without getting into the debate of games of skill or chance.

This time, the GoM visited Goa and Bengaluru to meet industry stakeholders and sought legal opinion on valuation base to be considered for levying of GST. The industry has represented that online gaming which is held to be a game of skill cannot be equated with gambling. Industry experts argue that equating skill games with chance games will negatively impact the nascent industry.