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GST Council postpones discussion on GoM report on taxing online games, casinos

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The much awaited decision on taxation aspects of online gaming, casinos, and horse racing has been postponed by the GST Council, the apex decision making body on GST. This is the second time the issue featured in the agenda of GST Council this year.

In June, the GST Council referred the matter back to Group of Ministers (GoM) headed by Meghalaya Chief Minister Conrad Sangma based on request from Goa. Goa heavily relies on offline casino revenues and is of view that online gaming and casinos cannot be clubbed together for purpose of taxation.

In June, the GoM 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 on par with casinos. Later, the GST Council based on requests from Goa mandated the GoM to provide a revised report by the end of July which got extended multiple times. The revised  report was submitted a few days back.

This postponement only reflects the lack of consensus on how to tax online gaming and casinos. Finance Minister Nirmala Sitharaman said that the ministry will circulate the latest GoM report to all states and since there was no consensus by the GoM members, the matter will be discussed threadbare by all members in the next GST Council meeting.

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 the lottery lobby. Lottery is taxed at 28%. The other members of the GoM include Telangana, Tamil Nadu, and Gujarat.

Earlier reports indicated 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.

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