Ease of doing business for MSMEs: Traders’ body Confederation of All India Traders (CAIT) in a letter to Prime Minister Narendra Modi has urged him to step in, reassess, and overturn the decision made by the Goods and Services Tax (GST) Council to impose GST on the full face value of online gaming and clubbing it with gambling activities.
In a statement on Monday, following the letter sent to PM Modi on July 14, CAIT National President B C Bhartia and Secretary General Praveen Khandelwal noted that this decision would have disastrous consequences for the industry, rendering it economically unfeasible and would result in significant job losses.
In the 50th meeting of the GST Council held last week under the chairpersonship of Finance Minister Nirmala Sitharaman, the council had recommended taxing casinos, horse racing and online gaming at the uniform rate of 28 per cent. Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of horse racing and on the full value of the bets placed in case of the online gaming, the council had said in a statement.
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According to CAIT, this move would drive gaming users towards illegal offshore websites, compromising the safety of internet users and contradicting the central government’s efforts to regulate and promote secure online gaming practices.
Bhartia and Khandelwal emphasized that courts have repeatedly deemed the equivalence of gaming and gambling as unconstitutional. Hence, they called upon PM Modi to safeguard the industry from its potential demise and review the GST Council’s decision.
The trade leaders highlighted that this decision contradicts the principles of Digital India and Start-Up India. They stressed the importance of regulating and nurturing the sector to prevent its unsustainability, the migration of businesses to offshore gambling platforms, and the demise of an emerging technology industry.
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Importantly, a Group of Ministers (GoM) was constituted earlier to look into the issues related to taxation on casinos, horse racing and online gaming and a report was submitted in June 2022 before the GST Council in its 47th meeting wherein, it was decided that the GoM may relook into all the issues once again.
The second report was placed before the 50th GST Council meeting recommending that the GST council may decide since no consensus could be reached on whether the activities of online gaming, horse racing and casinos should be taxed at 28 per cent on the full-face value of bets placed or on the GGR (gross gaming revenue).