Group of Ministers on online gaming, casinos, race courses pitch for 28% GST: Sources

Taking a fine-balanced approach, keeping in mind the concerns of the government as well as the industry, the GST council nominated a group of ministers on online gaming, casinos and race courses, who met for their final meeting at North Block on Wednesday, and they are understood to have recommended a hike in GST rate from the current 18 percent to 28 percent, sources said.

“The recommendations have been made unanimously that the GST rate should be hiked from 18 percent to 28 percent. But the clarity is there in the report that there should not be any distinction between a game of chance and game of skill. Both should be kept at par,” sources have told CNBCTV18.

The sources added that “the report has also decided to levy GST on the initial betting amount and not at the prize money or at each and every bet.”

This, however, is a breather for the customers as well as the casinos, race courses and online gaming operators as it makes compliance much easier.

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Meanwhile, post the meeting, Chairman of the group of ministers — Meghalaya Chief Minister Cornad Sangma said that the group is ready with its report which is likely to be submitted to the Union Finance Minister in a day or two, without sharing much of the details.

“We will share the report with the Union Finance Minister in a day or two. I am hopeful that the GST council will take up the recommendations in the next meeting. These are just the recommendations and it is for the council to take a final call,” Sangma said.

Industry experts feel the hike in rates was in offing but it might discourage a nascent industry mushrooming in the country.

Ankur Gupta, Practice Leader ( Indirect Tax), SW India said, “As expected, GoM has unanimously agreed for levying 28 percent GST on online gaming. While the industry had made representations that grouping online games with betting/gambling would be a big hit to all market players, however, it seems that no such bifurcation would be made. In most countries, the online gaming industry is taxable more or less at par with the current taxability of 18 percent, therefore, it's a disadvantage for Indian game companies if the taxability moves to 28 percent. Now what has to be seen is the valuation of these services. It should be applicable only on margin/platform fee because in case it is applicable on the entire pool value then it would adversely impact the customers, as well as they would get less playable value.”