04.07.2022: Group of Ministers may not tweak 28% GST on online gaming, casinos

The group of ministers (GoM) reviewing the goods and services tax slabs for online gaming, horse racing and casinos is unlikely to tweak the 28% rate recommended for these activities, people aware of discussions said.

The GST Council has given the GoM, headed by Meghalaya chief minister Conrad Sangma, time till July 15 to review its proposals.

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 people told ET.

“There is no reconsideration of the 28% for online gaming and horse races. It was not even discussed in the council meeting. It is just about casinos, following a request from Goa,” a person said.

Currently, GST of 18% is levied on casinos, horse racing and online games where no betting or gambling is involved. The rate is 28% for online games involving betting or gambling. The GST Council last week deferred the GoM’s proposal to levy GST at 28% on all these activities.

The council, during the second day of its meeting, sent the proposal back to the ministerial panel to re-examine the issues after holding discussions with states and stakeholders. The GoM is expected to meet again in a few days to iron out issues flagged by Goa minister and a member of the GoM, Mauvin Godinho.

More discussions sought
The GoM had recommended that the highest GST rate of 28% be charged on the full face value of chips or coins purchased at a casino by a player. The chips may be used for buying items such as food and beverages as well.

It said once GST was charged on the purchase of chips or coins, no further GST should be applicable to the value of bets placed in each round of betting, including those played with the winnings from previous rounds.

The proposal was objected to by Goa minister Godinho during the GoM proceedings, after which the council invited him to give a presentation at the Chandigarh meeting.

Union finance minister Nirmala Sitharaman, in a June 29 briefing about the council’s decisions, said the Goa government, while presenting its case, said casinos needed a different treatment.

For instance, a person may pay ₹10,000 at the counter to get chips. But, once inside, that amount may be spent partly on food and other activities and ₹8,000 on gambling. The question that arises is whether the tax be levied on the entire ₹10,000 or just ₹8,000 spent on gambling, a government official said.

Goa has also raised concerns over online casinos owned by foreigners, which manage to escape the tax net, and sought more nuanced discussion.

The GoM is unlikely to offer any concessions to online gaming, even as the gaming industry is demanding that skill-based games be treated differently. “Only the issue of taxation of casinos will be discussed when the GoM meets next,” another person said.

The GST Council will at its next meeting in Madurai, expected in the first week of August, take up the final report of the GoM.

Source: The Economic Times 

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