11.11.2022: Group of ministers’ panel on GST on casinos, gaming may stick with 28% taxation decision

The Conrad Sangma-led Group of Ministers (GoM) may stick to the recommendations that were part of the report it had first prepared in June on the taxation of casinos, race courses, and online gaming, sources said.

“The committee may go back to the first report itself,” a source aware of the committee's deliberations said.

The first report was considered by the GST Council at its 47th meeting in Chandigarh in late June. In that report, the GoM had recommended taxing online gaming, casinos, and race courses at a uniform 28 percent, irrespective of the nature of the games – whether they are based on skill or chance.

However, Mauvin Godinho, Goa's representative on the GST Council and the state's minister for trade and commerce, had raised concerns against the decision.

Following the representation of Godinho, who favoured treating casinos differently, the GoM was given time until July 15 to speak to stakeholders and firm up its report.

Chance or skill?

With no consensus even after a meeting in early September, the GoM decided to seek legal opinion on the issue.

Reports emerged earlier this month that the GST Council's law committee wants a clear distinction to be made between games of chance and games of skill before a decision is made on the GST rates.

However, according to another source aware who attended the GST Council's Chandigarh meeting, the tax authority should not get into the “game-of-chance or game-of-skill discussion”.

“There is nothing clear-cut which allows us to say there is no skill involved at all (in online gaming). Similarly, can we say it is completely based on skill and there is no element of chance? No. The tax man needs to come out of this debate as no clarity will emerge on this,” the source said.

“Online gaming and casinos should be declared as a service and taxed as one… in an activity like construction, an essential commodity like cement is being taxed at 28 percent. So, there is no harm if we levy 28 percent tax on these things (online gaming, casinos, race courses),” the source said.

“The objective is collecting tax, not regulation, prevention, or prohibition,” the person added.

The submission of the report by the eight-member GoM is key as it will then lead to the finalisation of the GST Council's next meeting, set to be held in Madurai.

Initially scheduled for early August, the Council's 48th meeting has been repeatedly delayed because of the non-submission of reports by GoMs.

While the Dushyant Chautala-led GoM on Goods and Services Tax Appellate Tribunal has finalised its recommendations, the Basavaraj Bommai-led GoM on rate rationalisation is yet to do so.

At its last meeting in late June, the GST Council had accepted the Bommai-led GoM's interim report and given it three months to decide on other matters.

According to a third source aware of the GST Council's deliberations, it is difficult to say when the Council will meet next.

“It can happen next week or next month,” the source said.

The first source said the upcoming state elections did not pose any conflict of interest and the Council could meet, irrespective of the polls.

Source: Money Control 

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