[Exclusive] 50th GST Council Draft Minutes: Except Goa & Sikkim, consensus was to tax on face value, no distinction on skill & chance, social & moral issues raised

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Sikkim and Goa the only two states to have suggested 28% GST on casino transactions based on Gross Gaming Revenue (GGR) according to minutes from the 50th GST Council meet held in July. The view of Goa and Sikkim was supported by Gujarat. Nagaland, Delhi and Andhra Pradesh have suggested treating casinos separately from online gaming and horse racing as it impacted only Goa and Sikkim.

The minister from Tamil Nadu suggested that all states should follow Tamil Nadu in banning online games of chance.  On horse racing, the Minister proposed that if it is deemed a game of skill, a tax of 28% should be levied on the GGR value. Conversely, if it is classified as a game of chance, the full value at a tax rate of 28%.

Uttar Pradesh maintained a steadfast view that a tax of 28% should be levied on the fullface value for all three activities. Uttar Pradesh also said in absence of a mechanism for calculating GGR, it would generate negligible tax revenue. West Bengal concurred with the view of Uttar Pradesh.

Read: UP joins lottery lobby as West Bengal pushes for 28% GST on online gaming

Goa disagreed with Uttar Pradesh and stated that comparing casinos, horse racing and online gaming together would amount to comparing apples and oranges.

Karnataka said the tax on tobacco, luxury cars, and other items had sometimes exceeded their manufacturing value taking into account social principles and similarly gambling and betting have to be taxed.

The minutes note that all states except Goa and Sikkim were unanimous on taxing on full face value and the discussion primarily centred around giving any concessions to Goa and Sikkim.

Delhi minister Atishi who attended the meeting suggested that taxing on GGR would involve complex calculations and proposed taxation on full face value. Interestingly, before the 2 August Council meet the minister said she would ask the Council to reconsider its decision as she believed that promoting start-ups and entrepreneurship is the only way to grow the economy.

As last resort, Goa requested that casinos be taxed at an abatement of 60% resulting in an effective tax rate of 11.2%.

However, as no division of votes was sought, the Council decided on 28% tax rate on full face value. The Council, however, missed to clarify if tax is on every transaction or is limited to initial deposit for which another meet was conveyed on August 2.