Home General GoM Calls For 28% GST On Online Gaming, Casinos
GoM Calls For 28% GST On Online Gaming, Casinos

GoM Calls For 28% GST On Online Gaming, Casinos


Tax likely on face value: GoM calls for 28% GST on online gaming, casinos

The Goods and Services Tax or GST Council charged an empowered group of ministers referred to as GoM with investigating how to tax online casinos, gambling, and horse racing, but they haven’t yet come to an agreement on placing a 28% duty on total or gross gaming revenue also known as GGR earned. Even though the report was supposed to be submitted by Wednesday, the committee may need one or two weeks to complete it and submit the same in a full explained format.

Conrad Sangma, the chief minister of Meghalaya, chaired a team that met at the end of July this year to examine issues which are facing the gaming business. The panel decided to charge gross gaming revenue rather than the net amount which is derived after deducting prize money from the GGR.Before paying out prizes to victors or the winners, casinos and online gaming businesses gather their gross gaming revenue or the GGR.

The GoM discussed a 28% GST on the whole face value or bet amount in online gaming at the most recent meeting held by the council. However, there are certain difficult tax treatment issues, particularly in the case of casinos, and they will need further consideration, according to a panel member so as to bring in clarity to the whole process.

In addition, the panel was still reviewing all submissions, therefore the report was not yet final. Next week is probably when the group meets.

According to sources of experts and other interested parties it was noted that, the panellists also addressed whether to use distinct standards or techniques given that online gambling and casinos operate using different theoretical foundations which is a valid argument.In its first report, the GoM recommended that internet gambling be taxed at flat rate of 28% on the total amount paid to the winners, without drawing any distinction between skill-based and chance-based games.

It was argued that eliminating the prize pay-outs from the value of bets would essentially exclude actionable claims from the value of supply, contradicting the exact legislative goal of including them under the scope of GST. If just the platform charge is subject to the tax, only the service portion of the supply will be subject to tax.

Actionable claim supply will not be taxed.Provided that online gambling and casinos operate on fundamentally distinct principles, assessment of services must be realistic. An online gambling platform’s revenue serves as the service element, and any additional taxes will be subject to judicial review.As the player keeps adding to or deducting from the total initial buyout of chips, tax could be assessed in the case of casinos on a completely different principle, according to advocati, who is representing casinos and online gaming companies in several writ petitions under GST and former service tax

According to information obtained, the panel thought about the effects of the earlier suggestion to tax based on face value and gross revenue. It was stated that there would be significant financial consequences if GGR were subject to GST according to estimates made by the industry. When internet gambling or casinos are taxed at GGR, the tax disparity between these activities and the lottery which basically is taxed at face value is greatly distorted.

The GoM had previously advised applying the highest GST rate of 28% to the entire face value of any chips or coins that a player had bought from a casino. The chips can be used to purchase goods like meals and drinks by the players.State of Goa opposed to the proposal, though, and the GST Council requested that the issue be brought up in the June meeting as a result of the same.

The Goa government has stated once more that Sikkim and the western state are the only ones affected by the casino issue. The panel should, it was suggested, take into account the worry that it would affect Goa’s economy because it has wider consequences.Additionally, it was believed that casinos should be included in the GST on the face value that is applied to lotteries, online gambling, and horse racing. When casinos are taxed equally across India, Goa does not suffer in comparison to other states.

Nirmala Sitharaman, the finance minister, stated to the media on June 29, 2022 that the Goa government had requested an exception for its casinos when presenting its case. The GoM’s final report will be discussed by the GST Council at its upcoming meeting, which is scheduled for the month of September 2022.