GoM proposes 28% GST on Casinos, online gaming, horse races

27 Jun 2022 , 08:51 AM

A proposal from the group of state finance ministers to collect a 28% GST on online gambling, casinos, and horse racing is expected to be reviewed by the GST Council at its meeting this week, according to sources. 

Online gaming should be taxed at the entire value of the consideration, including the contest entrance fee paid by the player upon participation in the game, according to a recommendation made by the Group of Ministers led by Meghalaya Chief Minister Conrad Sangma.

The GoM has proposed that GST be applied to the whole amount of bets placed with bookmakers and pooled in totalisators on racetracks.

In casinos, GoM advised that the tax be applied to the entire face value of the chips or coins a player has purchased from the establishment. The value of bets put in each betting round, including those placed using wins from earlier rounds, would not be subject to further GST.

The GoM has proposed adding a 28% Goods and Services Tax to entry/access fees to casinos, which automatically covers food, drinks, and other items.

However, sources noted, that optional purchases made apart from admission tickets will be subject to the corresponding tax rate. Casino, horse racing, and internet gambling services are now subject to 18% GST. The technique for valuing the services would be chosen by the GoM.

A panel of state ministers was established by the government in May of last year to assess better the value of the services provided by casinos, online gaming portals, and racetracks in order to assess the Goods and Services Tax (GST)

Rajat Mohan, the senior partner at AMRG & Associates, claimed that the 28% tax rate on gambling, horse racing, and casinos would put them on par with many other sinful products like pan masala, cigarettes, and bottled water.

Online gambling, horse racing, and casinos would be subject to gross revenue taxes rather than net value-added taxes, according to Mohan.

This approach could temporarily boost the exchequer, but in the long run, he warned, it would attract the unorganized sector and encourage the widespread production of dirty money. The GoM report will probably be discussed in the GST Council’s upcoming meeting, which will be held in Chandigarh on June 28 and 29.

Ajit Pawar, the deputy chief minister of Maharashtra, Kanubhai Patel, the finance minister of Gujarat, Mauvin Godinho, the Panchayati raj minister of Goa, P Thiaga Rajan, the finance ministers of Uttar Pradesh and Telangana, and Suresh Khanna are the other state ministers who make up the GoM’s eight members.