GoM could fix 28% GST on total FV or bet amount in casinos, race courses & online gaming

On Monday, the Group of Ministers (GoM) formed by the Goods and Services Tax (GST) Council concluded its discussions for charging a 28% GST on the total face value or bet value on gross gaming revenue from online gaming and casinos, as per the official sources.

Further, the Meghalaya CM Conrad Sangma-led GoM has also recommended not to impose any GST on the net payment after reducing the prize money. The GoM may submit its report before the GST Council meets during the mid of August 2022.

However, certain ministers who are members of the GoM have not attended the earlier meetings. These include Gujarat, Telangana, Tamil Nadu, and Maharashtra. The last date for submission of the GoM report is 10th August 2022. Hence, there could be one more round of meeting before drafting the final piece to be tabled before the GST Council’s next meeting.

The GoM was formed at the 47th GST Council meeting in Bangalore and Goa last week. It took note of industry concerns, such as stakeholders of the Turf Authorities of India in Bangalore and casinos in Goa. 

Those in the evaluation process have indicated to the media that there is an in-principle agreement to charge 28% GST on gross gaming revenue. Many industry stakeholders are concerned about the GST rate being levied at the highest slab. However, all are waiting for the final report.

A couple of issues need to be addressed in the taxation of online gaming, casinos, and race courses. Valuation is the primary concern wherein actionable claims are out of the scope of GST. Hence, only the service fee or income from casinos or online gaming can be taxed. Furthermore, the valuation rules should differ for both casinos or race sources and online gaming.

Questions are being raised about whether GST will be charged on gross value incurred or the net income earned from the activity. How the price paid for food and entertainment will be treated in a combined setup, including the underlying compliance and reporting issues, also needs to be addressed by the GoM. Industry experts claim that a game of chance could be levied a higher GST rate, whereas a game of skill may be retained at 18%. 

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in

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