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Decision on GST on Online Gaming, Casino & Horse Racing Deferred to September

Meghalaya CM Conrad Sangma and Union Finance Minister Nirmala Sitharaman
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  • Namita Ghosh August 9, 2022
  • 3 Minutes Read

The GST Council will likely meet in September instead of mid-August to decide how GST will be levied on online gaming, casinos, and horse racing. The postponement is due to the delay in submission of the final report by the Group of Ministers (GoM) looking into the proposed changes in the GST on these sectors. This is the second time the GST Council has deferred its scheduled meeting.

The GST Council was to meet in Coimbatore, Tamil Nadu, in the first half of August, but there was a delay owing to Parliament sessions. The Council has tentatively decided to meet in September to arrive at a final consensus on the base on which 28% GST will be charged on online gaming, casinos, and horse racing.

The GoM has held several meetings with industry stakeholders in Bengaluru and Goa. However, it is yet to reach any conclusion.

On August 6, GoM head, Meghalaya CM Conrad Sangma, tweeted that he had met Union Finance Minister Nirmala Sitharaman last Saturday, apprising her of the work done for the report.

 

 

Why the Delay?

The GoM had, in its first report to the GST Council, recommended a 28% GST across online gaming, casinos, and horse racing. They subsequently suggested that the total face value of chips or coins purchased from the casino by players or the entry fees paid by a player to enter a poker game or fantasy contest should be taxed, with no further GST to be applied to the value of the bets placed in each betting round.

Currently, the GST charged for online gaming is at 18% of the gross revenue of the operators and does not account for contest entry fees paid by players. The GoM has recommended a 28% GST should be levied on the total value of the consideration, including the contest entry fee paid by the player for participation in such games.

In the last GST Council meeting on July 25, GST Council chairwoman, Union Finance Minister Nirmala Sitharaman, deferred the Council’s decision on the sector after the Goa CM and Finance Minister Dr. Pramod Sawant voiced objections on how casinos were to be taxed. She asked the GoM to go back to the drawing board and meet with relevant stakeholders before re-submitting its final report.

Nirmala Sitharaman
Nirmala Sitharaman

 

The GoM subsequently invited representations from stakeholders and held a virtual meeting of members on July 12. The GoM also went through submissions by the Turf Authorities of India (TAI) on horseracing before meeting turf facilities in Bengaluru. The GOM held a two-day session in Bengaluru and Goa on July 23 – 24 to get an industry perspective, followed by another meeting on July 25.

Reports showed that the GoM had cemented its recommendations for levying a uniform 28% GST on the three sectors, although stepping down from its earlier proposal on the valuation method. The GoM reportedly decided that for casinos, only the actual betting component and not the total consideration that may include other bundled goods and services should be taxed. However, the group has not come up with a clear verdict confirming these speculations.

If the latest delay is anything to go by, the GoM is giving the matter more thought before drafting its final recommendations. While a 28% GST is almost a certainty for these sectors, stakeholders will have to wait a little longer to see what valuation method the GST Council arrives at.

This is a developing story. Keep following PokerGuru for the latest updates!

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