A Group of Ministers (GoM) is open to recommending separate rates and mechanism to calculate GST for online gaming, casinos and horse racing. The GoM aims to submit the final report within 7-10 days for the consideration by GST Council.
The GoM, headed by Meghalaya Chief Minister Conard Sangma, met here on Monday. A GoM member told BusinessLine: “All three (gaming, casinos and horse-racing) need to be treated differently and rates also can be different as well as valuation mechanism.” Further, there may not be a new report but an addendum to the existing report.
Though there was no official word on different rates, Sangma did give an explanation for different valuation mechanism. “All three are different games and hence we cannot have the same formula for all. The GoM is taking slightly more time because it is a very complex issue,” he said.
The GoM is reworking its report after GST Council said it should fine-tune its recommendation. In the earlier report, the GoM had recommended a uniform 28 per cent rate on online gaming, casinos and horse racing. For valuation, in case of online gaming, it suggested GST to be levied on full value of the consideration by whatever name including contest entry fee paid by the player without making any distinction between such as games of skill or chance.
In case of casinos, GST was recommended to be applied on full face value of the chips/coins purchased from casinos by a player. For horse racing, it recommended, GST should continue to be levied at the rate of 28 per cent on the full value of bets pooled in the totalisator and placed with the bookmakers.
But these recommendations are likely to undergo a change especially as there have been a number of court rulings. The GoM intends to seek legal opinion. Sangama said the Gross Gaming Revenue (GGR) is something that is applicable in casino and the methodology of where and how collected. Supplementing this view, Mauvin Godhinho, Minister for Transport, Goa, said: “It (GGR) is internationally accepted practice; there is no doubt about that. But how that mechanism is to be involved, is the issue. We are applying our mind very closely. There is element of legal opinion also being taken to sure up the thing further.”
Initially, the GoM was expected to submit its report by July 15 so that it could be taken up by the GST Council early in August. However, the GoM is taking more time. “We are hopeful that within next 7-10 days, we should be able to close this and submit,” Sangama said. Once the GoM submits, then date for GST Council can be finalised, which is scheduled to take place either in Madurai or in Trichy.
Taking note of GoM open about different rates for online gaming, casinos and horse racing, Ankur Gupta, Practice Leader (Indirect Tax), SW India, said the entire gaming industry had made representations to consider taxability on online gaming at 18 per cent which is at par with global taxability. “With the advent of technology and the use of handheld devices, the online gaming market is fast growing at $3 billion with more than 400 million users, and is expected to grow rapidly in next half a decade. Therefore, it is important to put taxability at par with global tax rates so that the Indian industry remains competitive,” he said.