The Goods and Service Tax (GST) Council is all set to levy a uniform 28 percent tax on full-face value for online gaming, horse racing, and casinos, in its 50th meeting.
The government is expected to bring forward a legal amendment to set this forward. The move will enable the inclusion of horse racing and online gaming under actionable claims.
What is the decision of the GST Council?
The uniform levy of 28 percent will apply to the face value of the chips bought in casinos. The full value of the bets is placed in the situation of online gaming, and for horse racing, the full value of the bets is put with the bookmaker.
The ministerial panel on casinos, online gaming, and horse racing earlier shared the alternative option of levying tax on platform fees or gross gaming revenue, i.e. the charge paid to access the gaming services. However, this alternative option did not find favor.
The government is expected to release amendments to the laws related to GST to make horse racing and online gaming included in Schedule III as taxable actionable claims. Actionable claims, in respect of GST, are defined as goods under the Central Goods and Services Tax Act, 2017. An actionable claim can be understood as an unsecured debt to any beneficial interest in movable property that is actually not possessed by the claimant.
Till now, betting, gambling, and lottery were classified as actionable claims. However, horse racing and online gaming too will now be included.
A few state finance ministers, in the Council meeting, raised their brows over the increasing addiction to online gaming, particularly among children. A uniform 28 percent tax imposition was actually a decision taken after the consensus of all states.
Nirmala Sitharaman, the Union Finance Minister, heads the Goods and Service Tax Council. She stated that the motive was not to cease the industry, but it was the "moral question" regarding taxing both gaming at the very same rate as other essential items that led the Council to take the move.
“Our agenda is not to end any industry… all types of businesses have to function… there was discussion on the moral question that on one front, you do not want to end an industry. But that does not mean that you give more incentives to them than essential goods… all states participated in this decision which has been pending for the last 2-3 years. We could take the decision because every state clearly participated in it,” stated the Union Finance Minister.
Decision by the Group of Ministers (GoM)
A Group of Ministers was formed to oversee the issues relating to taxation on horse racing, online gaming, and casinos. The first report was submitted by the GoM in the month of June last year. The report was then discussed in the GST Council in the 47th meeting.
In the first report by the GoM, a uniform 28 percent rate for race courses, online gaming, and casinos on the full value of the consideration paid was recommended. The report also suggested that there should not be any distinction made for levying GST based on the activity is a game of chance or skill or both. However, when Goa put forward reservations on the GoM report in the month of June last year, the Council planned to review the report.
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