West Bengal and Uttar Pradesh on Monday supported goods and services tax (GST) on online gaming, horse racing and casinos at a uniform rate of 28% on the full value of the consideration, without making a distinction between games of skill or chance, even as the group of ministers (GoM) on the matter sought legal advice.
The GoM will take legal opinion, probably from the attorney-general, on whether or not the prize money in online gaming and horse racing is covered within “actionable claim”, before submitting the final report in a week to 10 days.
“Chaired a meeting of the GoM on casinos, race courses & online gaming in New Delhi. After taking the opinion of stakeholders & after successive meetings to seek the suggestions of all members, we will take legal opinion before submitting the final report,” Meghalaya chief minister Conrad Sangma tweeted after the meeting.
The GST Council, which will likely meet later this month, will consider the latest report, along with the earlier one submitted by the GoM in June.
The GoM, in its first report, has recommended that in the case of online gaming, the activities should be taxed at 28% on the full value of the consideration, by whatever name such consideration may be called, including contest entry fee, paid by the player for participation in such games, without making a distinction such as games of skill or chance etc. Since GST is levied on online skill-based gaming at 18% currently on the platform fee (about 20% of the contest entry fee), the tax incidence on the gaming industry will rise.
“The Supreme Court has already held in various cases that games of skill and games of chance cannot be separated. The Uttar Pradesh finance minister has supported us on all these issues,” West Bengal finance minister Chandrima Bhattacharya told FE.
In the case of racecourses, the GoM had earlier said that GST should continue to be levied at the rate of 28% on the full value of bets pooled in the totalisator and placed with the bookmakers. In the case of casinos, GST was to be applied at the rate of 28% on the full face value of the chips/coins purchased from the casino by a player. In the case of casinos, once GST is levied on the purchase of chips/coins (on face value), no further GST to apply to the value of bets placed in each round of betting, including those played with winnings of previous rounds, the GoM had said in its first report.
No tax on betting using chips won during a game in a casino is seen as a sort of a concession, which is not available to players in lotteries.
“On Casinos, we have said that the GST should be on entry amount as well as the prize amount,” Bhattacharya said.
Another member of the GoM, who did not wish to be named, said the tax rates and the base on which rates will apply may also vary for online gaming, casinos and horse racing.