GST Council likely to consider single tax rate for online gaming, race courses and casinos

There has been a lot of debate on the concept of a game of skill versus a  game of chance. However, people in the know have told CNBC-TV18 that the GST Council is likely to consider one single tax rate for online gaming, racecourses, casinos and that could be as high as 28 percent.

The industry, especially the online gaming world, has been pitching for 18 percent in a lot of submissions. However, the government is not considering these representations as of now, as per sources.

The Council is not keen at all to have two different rates of 18 percent and 28 percent based on the principle of a game of skill and a game of chance. The view is that that two rates are prone to misuse and can lead to an increase in litigation because many games of skill also have a chance element. So that's where the government thinking is to be precise.

The GST Secretariat had asked GST Council earlier in the month to issue clarity on the GST rate and the applicability of the levy on these services, sources told CNBCTV18. This follows a directive from the Punjab Haryana High Court to the effect.

The Court in August had issued a stay order on any GST enforcement action against tax avoidance till the GST Council issued clarity on the GST rate and the applicability of the levy on these services.

The Punjab and Haryana High Court in an order on 29 September said that no coercive action should be taken by GST authorities to recover GST from online gaming platforms until clarity comes from GST Council. This was in response to a petition filed by an online gaming company – WITZEAL, which had faced an investigation and search enforcement action for tax avoidance by GST enforcement agency. WITZEAL had challenged the investigation proceedings initiated by GST authorities against recovery and had complained of coercive measures.