GST Council likely to meet in September to consider 28% GST on casinos and online gaming

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The Goods and Services Tax (GST) Council will likely meet in September instead of August as planned earlier to consider the base on which 28% GST will be levied on casinos and online gaming. This is because a group of ministers (GoM) reviewing taxation of these activities is yet to submit its report.

Another GoM tasked with making recommendations on setting up GST tribunals in each state will also take more time to finalise its report, sources told FE.

The ministerial panel on casinos, race courses and online gaming met on July 23 in Bengaluru to understand various aspects of racing and on July 24 in Goa to get an industry perspective on taxation of casinos.

“A final meeting of this GoM is expected after August 15 to finalise its report,” an official said. Earlier, the GoM has been given time till August 10 to submit its final report.

The GoM, in its first report, has recommended that online gaming activities should be taxed at 28% on the full value of consideration, by whatever name such consideration may be called including contest entry fee, paid by the player for participation in such games without making a distinction such as games of skill or chance. Since GST is levied on online skill-based gaming at 18% currently on the platform fee (about 20% of the contest entry fee), the tax incidence on this gaming industry will rise.

In case of race courses, the GoM has said GST should continue to be levied at the rate of 28% on the full value of bets pooled in the totalisator and placed with bookmakers. In case of casinos, GST should be applied at the rate of 28% on full face value of the chips/ coins purchased by a player. Once this is levied, no further GST should apply on the value of bets placed in each round, including those played with the winnings of previous rounds, the GoM has said.

No tax on betting using chips won during a game in a casino is seen as a sort of concession, which is not available to players in lotteries.

In the council meeting in Chandigarh on June 29, the GoM convened by Meghalaya chief minister Conrad Sangma was asked to re-examine the taxation issues pertaining to casinos, racing and online gaming. This followed a plea from Goa for better understanding and differential treatment of casinos. Goa had flagged issues such as calculation of tax if the full amount of token purchased is not utilised in a casino and the balance returned at the counter, or if a portion was used for food and entertainment.

The GoM on rate rationalisation, convened by Karnataka chief minister Basavaraj Bommai, was given time till September-end to submit its report. However, it’s not clear if the rate rationalisation report will be ready by then to be taken up in the council meeting.

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