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The Group of Ministers (GoM), nominated by the Central GST Council to look into the finalization of GST on casinos, horse racing, and online gaming, will be meeting in Bengaluru on July 23 and Goa on July 24 to get industry perspective from the horse racing and casino sectors.
In Bengaluru, GoM will likely meet with the representatives from the Bengaluru Turf Club to understand various aspects of the horse racing industry. The Club is likely to raise issues with the initial proposals submitted by the panel. The GoM will then head to Goa to review the working of casinos firsthand.
The issue of increasing the GST across online gaming, horse racing, and casinos was discussed at length in the last GST Council meeting in Chandigarh on June 28-29. However, a final decision on the proposed GST hike from 18% to 28% was deferred after Goa CM and the state Finance Minister Dr. Pramod Sawant called for further discussions and asked the Council to consider casinos differently from the other activities. He voiced concerns about the sustainability of casinos if the tax is computed on the total amount of the tokens purchased by players. The Goa Chief Minister even flagged issues like if the tokens purchased by players are not entirely utilized in the casino or if some are used in misc activities like food, beverages, or entertainment inside the casino.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, asked the GoM to “re-examine the issues based on further inputs from States and submit its report within a short duration.”
The GoM, in its last meeting held virtually on July 12, reviewed representations by industry stakeholders to decide whether a uniform 28% GST would apply to all three categories and at what methodology for taxation should be adopted. Due to differences in opinion, the group could not finalize its report and submit recommendations.
The GoM’s deadline to submit its report to the Central GST Council was July 15. But as per sources, the deadline has now been extended to August 10. The next GST Council meeting will likely take place in the third week of August to consider the panel’s recommendations.
Currently, the GST rate of the online skill gaming industry is 18% on the Gross Gaming Revenue (GGR), which in poker and rummy is the rake or commission retained by the platform, and 0% on Contest Entry Fee (CEF).
The GoM will only review whether tax should be imposed on the total amount spent at a casino or the amount spent on gambling. The GoM had recommended that the highest GST rate of 28% be charged on a player’s full-face value of chips or coins purchased at a casino. The chips may also be used for buying items such as food and beverages. It said that once GST was charged on purchasing chips or coins, no further GST should apply to the value of bets placed in each betting round, including those played with the winnings from previous rounds.
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