GST On Casinos, Horse Racing, Online Gaming: Law Panel To Review Industry Demand

A meeting of the GST Council is likely to happen after the Parliament's monsoon session which ends on Aug. 12.

<div class="paragraphs"><p>(Source: Sina Schuldt/Reuters)</p></div>
(Source: Sina Schuldt/Reuters)

The GST law committee will review representations by industry stakeholders and submit recommendations to the group of ministers on casinos, horse racing, and online gaming.

The committee comprises tax commissioners from the central government and various states.

The GoM, chaired by Meghalaya Chief Minister Conrad Sangma, will decide whether a uniform 28% GST would be applicable on all three categories and at what value will the GST be levied.

On July 12, the GoM met to finalise the report, which was to be submitted to the GST Council by July 15. However, the deadline has now been extended till Aug. 10, as reported by BQ Prime.

How GST Slab Will Be Calculated

"We heard representations from the industry from all three. They (online gaming industry stakeholders) want GST to be imposed on the gross gaming revenue (GGR) and not the full value," the West Bengal Finance Minister Chandrima Bhattacharya told BQ Prime.

Currently, 18% GST is levied on the GGR of online gaming, and 0% is collected on contest entry fee. The GoM will decide if online gaming should be taxed at full value of consideration i.e. the wagering amount that includes the entry fee.

"To support their contention, they cited various judgments. The law committee will now be examining this and submit its report to the GoM," Bhattacharya said.

There is consensus on the rate of tax at 28% from the GoM, but the contention of the gaming industry stems from the differentiation between games of skill and games of chance, and on what value the tax should be calculated, Hardik Gandhi, partner at Deloitte Haskins & Sells, told BQ Prime.

"If it is a game of chance, it could amount to betting which will be taxed as per the 28% slab and the value to be taxed will be the full wagering amount inclusive of contest entry fees. Whereas for games of skill, currently the tax is paid at 18% on the gross gaming revenue," he said.

According to Gandhi, GST for horse racing is expected to be calculated on the full value of bets placed with the bookmakers.

As for casinos, tax is expected to be levied on the full face value of chips/coins purchased on entry/access to casinos. Taxing at entry/access points of casinos would include foods/beverages and not just the betting amount, Gandhi said.

At the previous GST Council meet in Chandigarh, which was held in June, the Goa Minister for Transport and Panchayat Mauvin Godinho had sought a review on the value on which tax would be levied for casinos. The council then agreed to review GST on horse racing, casinos and online gaming too.

The GoM is expected to meet once before submitting the report.

A subsequent meeting of the GST Council is expected to happen after the Parliament's monsoon session, which ends on Aug. 12.