Fin Ministry reconstitutes GoM examining GST on online gaming, casinos, and race courses

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The Union Finance Ministry has reconstituted the Group of Ministers (GoM) to look into GST-related matters related to casinos, race course and online gaming. The reconstitution is necessitated as the earlier convenor Nitin Patel was dropped from the Gujarat’s Council of Ministers in September last year.

The then Home Minister and present Chief Minister of Karnataka, Basavaraj Bommai, and Deputy Chief Minister of Arunachal Pradesh, Chowna Mein, are no longer part of the group. Finance Minister of Uttar Pradesh, Suresh Khanna, is the new member, while the Finance Minister of Gujarat, Kanubhai Patel, has replaced Nitin Patel. Similarly, Chandrima Bhattacharya replaced Amit Mitra as the representative of West Bengal.

Earlier in October 2021, the GST Secretariat has asked the GST Council to provide clarity on the GST rate and the applicability of the levy on these services reported CNBCTV18. This followed a recent directive dated September 29 from the Punjab Haryana High Court (PHHC) on the matter. The PHHC had directed the GST department to take no coercive action on an online gaming company against the demand notices until the Group of Ministers (GoM) constituted to examine the issues provides clarity.

This is the second change in the composition of present group, which was constituted on May 24 last year. Interestingly, the group is yet to meet even once since the constitution. The GST rate applicable on online games involving betting or gambling is 28 per cent, and GST rate applicable on games not involving betting or gambling is 18 per cent.

The GST Council has created four-point phrases as a reference for the GoM as follows:

  1. To examine the issue of valuation o( services provided by Casinos, Race Courses and online gaming portals and taxability of certain transactions in a casino, with reference to the current legal provisions and orders of Courts on related
  2. To examine whether any change is required in the legal provisions to adopt any better means of valuation of these
  3. To examine the administration of such valuation provision if an alternative means of valuation is
  4. To examine impact on other similarly placed services like

Earlier, the Group of Ministers on lottery, formed in January 2019, it 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.

Later, the issue figured prominently in the 35th and 37th GST Council Meeting held on June 21, 2019, and September 20, 2019, respectively. In the September 2019 meeting, the Fitment Committee (a sub-committee of the council comprising officials to prepare recommendation on rate proposals) considered a proposal for reducing GST to 18 per cent from 28 per cent on wagering in horse racing, besides excluding prize money from the taxable value of horse racing but deferred the decision.