The Goods and Services Tax (GST) Council is all set to levy a uniform tax of 28% across the board on online gaming, horse racing and casinos in its 50th meeting.
The government is expected to introduce a legal amendment to address this issue. The move will allow horse racing and online gaming to be included in the requirements that can be processed.
What is the decision of the GST Council?
A uniform tax rate of 28% will be applied to the face value of chips purchased in the casino. The entire value of the bet is placed in the case of online gaming and in the case of horse racing, the entire value of the bet is transferred to the bookmaker.
The Ministerial Council on Casinos, Online Gaming and Horse Racing has previously shared that the alternative is to levy a tax on platform fees or gross gaming revenue, i.e. the fees paid to access the services game. However, this alternative is not popular.
The government is expected to introduce amendments to GST-related laws to include horse racing and online gaming in Schedule III as taxable claims. Actionable claims, in relation to GST, are defined as goods under the Central Goods and Services Tax Act, 2017. An actionable claim can be understood as an unsecured debt to any beneficial interest in movable property which the plaintiff does not actually own.
Until now, betting, gambling and lotteries were classified as actionable complaints. However, horse racing and online gaming will also be included.
Several state finance ministers, during the Council meeting, expressed concern over the growing addiction to online games, especially among children. Imposing a uniform tax rate of 28% is actually a decision made after the consensus of all states.
Nirmala Sitharaman, Union Finance Minister, heads the Goods and Services Tax Council. She said the motive was not to stop the industry but rather it was the “moral question” regarding taxing whole game at the same rate as other essential items that prompted the Council to make the move This.
“Our agenda is not to end any industry… all types of businesses have to operate… there has been discussion about the ethical question that on the one hand, you don’t want to end an industry. But that doesn’t mean you give them more incentives than essential commodities… all states are involved in this decision which has been pending for the last 2-3 years. We can take a decision because every state is clearly participating in it,” the Union Finance Minister said.
Decision of the Group of Ministers (GoM)
A group of Ministers was established to oversee tax-related issues for horse racing, online gaming and casinos. The first report was submitted by the Government in June last year. The report was then discussed at the GST Council in its 47th meeting.
In the GoM’s first report, a uniform rate of 28% for racing arenas, online gaming and casinos on the entire value of the amount payable was proposed. The report also suggests that there should not be any distinction in the taxation of GST based on whether the activity is a game of chance or skill or both. However, when Goa placed reservations on the GoM report in June last year, the Council had planned to consider the report.
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Source: pagasa.edu.vn