28 pc GST likely on casinos, online gaming, horse races on gross revenue

PTI, Jun 26, 2022, 5:32 PM IST

The GST Council in its meeting this week is likely to vet a proposal of the panel of state finance ministers on levying 28 percent GST on online gaming, casinos, and horse racing, sources said.

The Group of Ministers, headed by Meghalaya Chief Minister Conrad Sangma, 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 racecourses, 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 to the value of bets placed in each round of betting, including those placed with winnings in previous rounds.

Also, the GoM suggested that 28 percent Goods and Services Tax be levied on entry/access fees into casinos, which compulsorily include foods/beverages, etc.

However, optional supplies, made independently of the entry tickets, would be taxed at the rate applicable on such supplies, sources added.

Currently, services of casinos, horse racing, and online gaming attract 18 percent GST. The GoM would decide on the method of valuing the services.

The Government had in May last year set up a panel of state ministers for better valuation of services of Casinos, online gaming portals, and race courses for levying Goods and Services Tax (GST).

AMRG & Associates Senior Partner Rajat Mohan said a 28 percent tax bracket for online gaming, horse racing, and casinos would peg them at par with numerous sin goods like pan masala, tobacco, and aerated waters.

”Taxing online gaming, horse racing, and casinos at gross revenue instead of net value addition would be a departure from the global tax ethics,” Mohan said.

This proposal may sweeten the exchequer for a while; however, it would also entice the unorganized sector leading to rampant generation of black money in the long term, he added.

The report of the GoM is likely to be taken up in the next meeting of the GST Council on June 28-29 in Chandigarh.

The other state ministers in the 8-member GoM include Maharashtra Deputy Chief Minister Ajit Pawar, Gujarat Finance Minister Kanubhai Patel, Goa Panchayati raj Minister Mauvin Godinho, Tamil Nadu Finance Minister P Thiaga Rajan, Uttar Pradesh Finance Minister Suresh Khanna, and Telangana Finance Minister T Harish Rao.