The Goods and Services Tax (GST) Council will meet via videoconferencing on August 2 to take a final call on the levy of 28 per cent GST on online gaming, casinos and horse racing, even as officials maintained that there is no backtracking on the proposal. The details regarding the required legal amendment and tweaks in rules will be put up before the Council at the meeting, a senior government official told The Indian Express.

“The GST Council will meet on August 2 via videoconferencing to resolve this issue. We will put up the changes proposed in the GST law and the rules for the Council’s approval,” the official said.

While the official maintained that there is no reconsideration on the rate, the issue of whether the 28 per cent GST levy should be on entry value or each bet is expected to be resolved by the Council in its meeting. “There is no revision in the proposal. The amendment in GST law and rules as per decision taken by Council in the previous meeting will be put up to Council for approval. The earlier decision was only in principle,” the official said.

The legal amendment will provide specific details about the rate, the methodology of the face value on which the 28 per cent GST rate would be levied for online gaming, casinos and horse racing, the official added.

The initial understanding, after the GST Council decision earlier this month, was that the implementation framework will be decided in the rules to be issued by the finance ministry and the approval for the legal amendment would be taken up later in the Council after taking a deemed approval from the Chairperson of the Council, which is the Union Finance minister.

On July 11, the GST Council had decided to levy a uniform 28 per cent tax on full face value for online gaming, casinos and horse racing. The government was expected to bring in a legal amendment to facilitate this in the monsoon session of Parliament to enable inclusion of online gaming and horse racing under actionable claim and hence, facilitate taxation of these categories with no distinction for game of skill or chance.

While the government has maintained that this decision is not intended to harm any industry, online gaming companies have raised concerns about the impact of this move on the industry, as it is likely to affect volumes and thus the viability of gaming companies.

The uniform levy of 28 per cent tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of horse racing, and on the full value of the bets placed in case of online gaming. Earlier, the ministerial panel on online gaming, casinos, horse-racing had discussed the other option of levying tax on gross gaming revenue or platform fee, that is, the charge paid to avail the gaming services, but it did not find favour.

Earlier this month, top global and domestic investors including Tiger Global, Peak XV (formerly Sequoia Capital India) and Steadview Capital wrote to the Prime Minister, seeking to review the 28 per cent GST on online gaming. They said that the decision will adversely impact $4 billion in prospective investments in the sector.

Before that, earlier in July, more than a hundred industry associations representing top gaming companies in the country including Dream 11 and Mobile Premier League issued an open letter to the government on the tax decision, saying that it has left the industry in “significant distress” and could have “devastating implications” for the companies, including a shut down of businesses.

In an interview with The Indian Express earlier this month, Revenue Secretary Sanjay Malhotra had said that the online gaming industry is paying tax of only 2 per cent of the estimated turnover right now and by bringing in a uniform GST rate of 28 per cent for online gaming, the government could earn ten times more. The government had collected Rs 1,700 crore from online gaming, around Rs 300 crore from casinos and about Rs 80 crore from horse racing in FY23, he had said.

Source: The Indian Express
https://indianexpress.com/article/business/gst-council-to-meet-on-aug-2-over-issue-of-online-gaming-casinos-horse-racing-8861280/