GOM Meetings: GST on casinos a point of contention says CBIC Chairman

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The Union government has estimated the monthly collection at over Rs 1.2 lakh crore,
said Central Board of Indirect Taxes and Customs (CBIC) chairman Vivek Johri on Saturday reported by Times of India. He was in Panaji on a few official engagements.

On the GST issues with the gaming sector, the Chairman said the CBIC is yet to receive the recommendation from GOM. He said the point of contention on taxes on casinos is that it should be charged only on the token value minus the winning charges, which is the margin the casinos make in their business. Currently, the provision is that it should be charged on the total value of the token.

When asked about the revenue the Centre and state would earn through GST on gambling and casinos, he was quoted as, “In Goa alone, the collection would be around Rs 1,000-1,500 crore a year, which is quite a substantial part of the revenue the Goa Government earns. But online gaming is another very big prizing industry, and the revenue from lotteries is likely to be quite substantial. Currently, the rate is 28%.”

The GOM constituted last year, has recently met and finalised a GOM of 28%. The GOM is yet to submit the report to Finance Minister Nirmala Sitharanman. After a series of exits, the GoM was reconstituted recently. The current GoM, headed by Meghalaya chief minister Conrad Sangma, met twice in May and discussed the applicable GST rate on these three services.

Real Money Gaming in India, which usually peaks during the IPL aided by fantasy sports, is dominated by few operators, with Dream11, MPL and Games24x7 controlling over 95 per cent of the market. All three are unicorns as per their latest valuation. There are over 950 small platforms in India that offer esports, casual games and card games. The gaming industry, directly and indirectly, employs lakhs of people in the sector. The increased GST is expected to hit the revenues of the nascent industry.

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 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 GOM constituted to examine the issue to provide clarity.