GST GOM on online gaming, casinos, and racecourses: An overview of positions by member states

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It is nearly 16 months since the Group of Ministers (GoM) was constituted to examine the GST issues in online gaming, casinos, and horse racing. The initial GoM was reconstituted this February as the earlier convenor Nitin Patel was dropped from the 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.

The GoM, currently headed by Meghalaya Chief Minister Conrad Sangma, in June 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.

In the 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, the 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 to the value of bets placed in each round of betting, including those placed with winnings in previous rounds.

However, the 47th GST Council has recommended the GoM to re-examine the issues based on further inputs from States and submit its report within a short duration.

The revised report was initially expected to be submitted by July end which later got extended to August second week. As we are in the second week of September, the revised report is not yet submitted. Industry experts say an inordinate delay may negatively impact the sunrise sector.

At this juncture, it is relevant to see the members states in the GoM and their stands.

News reports indicate that an overwhelming majority of the GoM members opined that online gaming, horse racing and casinos are three different sectors. Therefore, they should all be treated separately.

In favour of equal treatment: West Bengal and Uttar Pradesh

But States like West Bengal which has a flourishing lottery industry is demanding for a uniform 28% taxation on the face value. The stand is rumoured on account of strong lobby by lottery industry. West Bengal is represented by Finance Minister Chandrima Bhattacharya.

Interestingly, West Bengal is joined by Uttar Pradesh which is on opposite side of political spectrum for a demand of 28% GST. Uttar Pradesh is represented by Finance Minister Suresh Kumar Khanna.

In favour of separate treatment: Goa and Meghalaya

Meanwhile, Goa which has a flourishing casino industry is demanding for separate treatment for each online gaming, casinos, and race courses. Industries minister Mauvin Godinho represents Goa in the GoM.

While Meghalaya which recently enacted a gambling regulation is positive on having a separate treatment for each of the three. Chief Minster Conrad Sangma represents Meghalaya in the GoM and also acts as the convenor for the GoM.

Fence sitters: Telangana, Tamil Nadu, and Gujarat

Telangana has imposed a ban on online gaming for stakes back in 2017 and the ruling dispensation is not positive about a positive environment for promotion of real money gaming. While the official stand is not yet out, Harish Rao the minister nominated has skipped the meeting by nominating officials to attend the meeting in his place. But since online gaming for stakes is banned in state anyway, Telangana may not be bottleneck to a rationale decision.  Finance Minister Harish Rao represents Telangana in the GoM.

Online gaming for stakes in a political taboo in Tamil Nadu and the Stalin government may want to tax it at the highest possible rate to score political brownie points. Dr. Palanivel Thiaga Rajan, Finance Minister in the Stalin government represents Tamil Nadu in the GoM.

While Gujarat sports minister recently batted for a fantasy sports regulation, there is no key information available on the active participation of Kanubhai Desai, the minister in the GoM representing Gujarat. Gujarat is also expected to side with the majority.

Devendra Fadnavis who replaced Ajit Pawar as Deputy Chief Minister has not attended any meeting of GoM.