08.09.2023: Karnataka cabinet defers draft ordinance on 28% GST on real-money gaming

The Karnataka cabinet on September 7 deferred the approval of a draft ordinance to impose a 28 percent GST on online money gaming, casinos, and racecourses.

Karnataka's revenue Minister, Krishna Byre Gowda, who represents the state in the GST Council, told Moneycontrol that the decision had been deferred to the next cabinet meeting.

Sources said that senior bureaucrats had hoped for the state cabinet's approval of the proposal, as it was included in the annexure to the cabinet meeting agenda.
“The finance department prepared a draft ordinance but now it has sent to the law department for scrutiny and will be placed on the agenda for the next cabinet meeting,” a source told Moneycontrol.
However, a finance department official claimed that cabinet has given a tentative nod for the draft ordinance.

Sources said that the state IT-BT Minister Priyank Kharge was not keen on the draft ordinance, as he had openly expressed his opposition.

Moneycontrol had previously reported that the Karnataka government was divided over the GST Council’s recent decision to levy 28 percent on the real-money gaming sector. Kharge had previously said that the tax poses a blow to India's $1-trillion digital economy target.

On August 2, the GST Council stuck to its initial proposal of levying 28 percent GST on the full face value, irrespective of whether it is a game of skill or chance.

However, it provided a partial relief by recommending that GST be levied on deposits instead of every bet placed, in order to avoid repeat taxation. Gaming platforms currently pay an 18 percent GST on platform fees.

The council, headed by Finance Minister Nirmala Sitharaman, had asked all states to implement the new tax rates by October 1, 2023. It also agreed to review this decision six months after implementation.

On August 11, the last day of the Monsoon Session, Sitharaman introduced bills to amend the Central and Integrated GST laws and it was passed in both Lok Sabha and Rajya Sabha. President Droupadi Murmu also gave her assent to the amendments on August 19.

Subsequently, states such as Haryana and Arunachal Pradesh have passed similar amendments to their respective state GST laws.

Source: MoneyControl

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