State finance ministers recommend 28% GST on online gaming, racecourses, and casinos

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Online gaming platforms, racecourses, and casinos will have to shell out 28% GST on the gross gaming revenue if the recommendation of a group of state finance ministers is accepted by the GST Council. (Representative image)

A group of state finance ministers set up to explore the quantum of GST and mode of taxation on casinos, racecourses, and online gaming met in Delhi on Wednesday, May 19, and finalised its recommendations. These will be sent to the Goods & Services Tax (GST) council for approval.

Sources in the group said that the recommendations included a GST of 28% on online gaming, racecourses, and casinos.

The group also finalised the mode of taxation for these services. Sources said that the tax will be imposed on initial betting and the gaming amount. That means that tax will be levied on the gross gaming revenue, or GGR, which is equivalent to sales or revenue, not the earnings. The group is said to have proposed that casinos be brought under the 28% tax slab while the tax will be only on the amount paid at the time of buying the betting instruments at entry and not on every betting transaction.

In a similar formula for horse racing, there will be a 28% tax on the entire betting amount and not the winnings.

The head of the group of ministers, Meghalaya Chief Minister Conrad Sangma, after the meeting, said that a consensus had been arrived upon on the issue of taxing casinos, racecourses and online gaming.

This may finally placate the operators who demanded that the tax to be levied should be kept at 18% and not 28%. They opposed a levy on the winnings from bets.

Sources said that based on various representations received by the GST council, the group was not in favour of levying GST on every bet or the winning amount.

The group had met earlier in May but could not finalise the method of valuing these services to levy this tax.

The online gaming industry that operates skills-based games like e-sports, rummy, poker, chess, and fantasy games had pitched for GST to be capped under 18%. They had backed the demand with a claim that a move into the higher tax bracket would derail the $2.2 billion industry that has 400 players and employs around 45,000 people.

The group of ministers’ report is expected to be handed over to the GST council in a few days.

The committee discussed issues related to casinos, racecourses and online gaming in India. These included examining the valuation of the services provided by casinos, racecourses, and online gaming platforms, along with the taxability of certain transactions at a casino.

There is, however, no clarity on whether some changes would be needed in existing legal provisions to implement the new valuation methods, which will come into play regarding casinos, racecourse, and online gaming.

A member of the group, Goa transport, panchayat and protocol minister Mauvin Godinho, said, “The GST Council will take the final call on the recommendations of the group. There have been several representations to the council, proposing that the four categories be taxed as per gross gaming.”