GST Council September meet unlikely as GoM on online gaming, casinos, and racecourses delays submission of the report

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The GST Council is unlikely to meet in September in the backdrop of a delay in the submission of reports by two Group of Ministers (GoM) including the GOM on GST in online gaming, casinos, and horse racing headed by Meghalaya Chief Minister Conrad Sangma. The report by another GoM headed by Haryana Deputy Chief Minister Dushyant Chautala on GST Appellate Tribunals is also delayed.

It is nearly 16 months since the GoM to examine to taxation in online gaming, casinos, and racecourses was constituted. The initial GoM was reconstituted this February as the earlier convenor Nitin Patel was dropped from Gujarat’s Council of Ministers in September last year causing a delay in the conclusion of the GoM mandate.

Currently, the GoM has 8 members (all ministers of various States) after considering Devendra Fadnavis who replaced Ajit Pawar as the Deputy Chief Minister in the Maharashtra government. In the last meeting, the GoM sought legal opinion on the applicable rate and valuation base to be considered for levying GST on online gaming, casinos and horse racing.

The GoM had in an earlier report recommended to the GST Council to levy 28 per cent GST on gross sales value as horse racing, online gaming and casinos are akin to betting or gambling.

However, since Goa wanted further discussions on valuation aspects with regard to casinos, the GST Council, comprising the Union finance minister and her state counterparts, suggested that the GoM hold further discussions and submit a final report by July 15. The due date was again extended to August 10. Subsequently, the due date was extended to the end of September.

The GOM recently visited Bengaluru and Goa to get industry inputs on online gaming and casinos respectively. GOM head and Meghalaya Chief Minister Conrad Sangma last month met Finance Minister Nirmala Sitharaman and apprised her of the developments on the submission of a final report.

All of this delay in providing clarifications on GST aspects, industry experts say, could have a negative impact on the nascent gaming industry that is estimated to be a US$5 billion market by 2025.