Ministerial group not allowed to adjust 28% GST to online gaming, casinos

The group of ministers (GvM) that assesses tax brackets for goods and services for online gaming, horse racing and casinos is unlikely to adjust the 28% recommended rate for these activities, according to people aware of discussions.

The GST Council has given the GoM, headed by Meghalaya chief minister Conrad Sangma, until July 15 to review its proposals.

The government will only assess whether to tax the total amount spent in a casino or the amount spent on gambling, the people told ET.

“There is no reconsideration of the 28% for online gaming and horse racing. It has not even been discussed in the council meeting. It only concerns casinos, following a request from Goa,” said one person.

Currently, a GST of 18% is levied on casinos, horse racing and online games that do not involve betting or gambling. The rate is 28% for online games involving betting or gambling. The GST Council last week postponed the government’s proposal to levy 28% GST on all these activities.

The council returned the proposal to the ministerial panel on the second day of its meeting to re-examine the issues after discussions with states and stakeholders. The GoM is expected to meet again in a few days to resolve issues identified by the Minister of Goa and a member of the GoM, Mauvin Godinho.

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Wanted more discussions

The GoM had recommended charging the highest GST rate of 28% on the full face value of chips or coins purchased by a player at a casino. The chips can also be used to purchase items such as food and drinks.

It said that once GST was charged for the purchase of chips or coins, no further GST should apply to the value of bets placed in each betting round, including those played with winnings from previous rounds.

The proposal was contradicted by Goa minister Godinho during the GoM proceedings, after which the council invited him to give a presentation at the Chandigarh meeting.

Union Finance Minister Nirmala Sitharaman said in a June 29 briefing on the council’s decisions that the Goa government, while presenting its case, said casinos needed different treatment.

For example, a person can pay ₹10,000 at the counter to get chips. But once inside, that amount can be spent partly on food and other activities and ₹8,000 on gambling. The question that arises is whether the tax will be levied on the entire 10,000 or just 8,000 spent on gambling, a government official said.

Goa has also expressed concern about foreign-owned online casinos managing to escape the tax grid, and sought a more nuanced discussion.

The GoM is unlikely to compromise on online gaming, even as the gaming industry demands that skill-based games be treated differently. “Only the issue of casino taxation will be discussed the next time the government meets,” said another person.

The GST Council will include the GoM’s final report at its next meeting in Madurai, expected in the first week of August.

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