According to people familiar with the development, a group of ministers (GoM) has found merit in imposing a 28 percent Goods and Services Tax (GST) on online gaming to bring it in line with levies on casinos, racetracks, and gambling, but has yet to formally submit its report to the GST Council, the final decision-making body.
The GoM, which has yet to complete its formal report, is set to send its recommendations to the Union finance ministry this week. The taxation structure of casinos, racetracks, and online gaming is being examined by an eight-member commission led by Meghalaya chief minister Conrad Sangma.
“The Group of Ministers (GoM) has reached an agreement on casinos, racetracks, and online gaming. “At a day or two, the report of our submissions will be given over to Hon’ble FM, Smti. @nsitharaman Ji, and the topic will be tabled in the next @GST Council Meeting,” the GoM chief tweeted on Wednesday. The GST Council is chaired by Union Finance Minister Nirmala Sitharaman. A request for comment from the ministry was not returned.
In accordance with the council’s website, GST on services, such as admission to entertainment events or access to amusement facilities such as cinematograph events, theme parks, water parks, joy rides, merry-go-rounds, go-carts, casinos, race-courses, ballet, sporting events such as Indian Premier League, and the like attract 28% GST. The top slab of 28% also applies to all services provided by a race club by means of a totaliser or a license granted to a bookmaker in such a club.
Furthermore, the same template may be used for bitcoins, which are subject to an 18 percent GST.
The high GST rate on these sectors, according to Saurabh Agarwal, tax partner at consultancy company EY India, will boost revenues. “However, because many of these games are purely for leisure,” he noted, “all types of internet gaming should not be evaluated for GST at 28 percent.”
Meghalaya, a state in northeast India, has agreed to make major plans to bring casino and online gambling and gaming to the state in order to generate much-needed money. A Group of Ministers (GoM) has agreed to suggest raising the GST rate on casino, racetrack, and internet gambling services to 28 percent, based on the following considerations.
The ministerial panel also ruled that the tax would be applied to the entire “face value” or “bet amount,” not just the overall transaction value. The prize money or net commissions (revenues) that gaming companies get are included in the total transaction value. According to reports in the media, the panel concluded that the tax should be levied on the amount paid at the entrance point, that is, upon buying the chips, rather than on each betting transaction.
