GST decision on online gaming, racecourses, and casinos deferred

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The Day-2 of the two day GST Council meeting has seen a discussion on the long standing issue of taxation of casinos, online gaming and horse racing.

While suggesting a uniform tax rate and valuation method for these activities, the Group of Ministers, headed by Meghalaya Chief Minister Conrad Sangma, said for the purpose of levy of GST, no distinction should be made in these activities merely on the ground that an activity is a game of skill or of chance or both. The GoM met twice in May to finalise the report.

According to reports, the GoM has recommended that online gaming should be taxed at full value of the consideration, including contest entry fee paid by the player on participating in the game.

In case of race courses, the GoM has suggested that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers.

In casinos, GoM recommended that the tax would be levied on the full face value of the chips/coins purchased from the casino by a player. No further GST would apply on the value of bets placed in each round of betting, including those placed with winnings in previous rounds.

However, Goa which heavily relies on revenues from casinos has raised objections on the valuation mechanism adopted. After deliberations, the matter is now again remanded to GOM for reconsideration, reported CNBC TV18.

Earlier, the Group of Ministers on lottery, formed in January 2019, in its report mentioned that it received miscellaneous representations similar to lottery. It recommended that the rate and valuation issues of casinos, horse racing, online gaming and betting may be referred to Fitment/Law Committee, and then taken to GST Council, either directly or through GoM as approved by the Union Finance Minister.

“Such a step (increase in tax rate on a higher base) is not only in dissonance with international best practices but is also violative of the principles of GST. Essentially, the online skill gaming operators are platforms, which bring players from various geographies together. The money pooled is eventually distributed to the winning player. The platform charges a predetermined fee, known as GGR, and pays tax on that. If you were to charge an increased tax rate on the entire quantum (pooled money plus commission), it is not only principally incorrect but will also annihilate this sunrise sector,” said Sameer Barde, CEO of E-Gaming Federation was quoted by Financial Express