The Goods and Services Tax (GST) Council will consider tax rate increase on online skill gaming from 18% to 28% and taxation issues related to casinos in its next meeting at Madurai in the first week of August.
During the meeting, the Council will also consider the report of group of ministers (GoM) on setting up of GST Tribunals (in each state for dispute resolution), finance minister Nirmala Sitharaman said after the Council meeting here. The GoM on tribunals will be set up in a couple of days with the mandate to submit report within a month. The decisions of the tribunals can only be challenged in high courts.
“The Council directed that the group of ministers on casino, race course and online gaming re-examine the issues in its terms of reference based on further inputs from states and submit its report within a short duration,” finance ministry said in a statement. Sitharaman said the GoM has been given 15-days and will submit its report by July 15.
“Goa finance minister said casinos need better understanding and treatment of casinos should be different. Some other ministers said let the GoM also look at once more issues related to online gaming and horse racing,” Sitharaman said. Goa had flagged issues such as how tax will be calculated if the full amount of token purchased is not utilised in a casino and returned the balance at the counter or some portion was used for food and entertainment.
The GoM had recommended that in case of online gaming, the activities will 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.
In case of race courses, GST will 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 case of casinos, GST be applied at the rate of 28% on full face value of the chips/coins purchased from casino by a player. In case of casinos, once GST is levied on purchase of chips/coins (on face value), no further GST to apply on the 28% value of bets placed ineach round of betting, including those played with winnings of previous rounds, the GoM had said.
The tax incidence was seen increasing on online gaming substantially as the GST was proposed to be levied on on the full contest entry amount (CEA) instead of the platform fee as it is in the present scenario.
“Industry further expects clarity on the term “initial gaming amount”, which is being assumed to be largely covered as the contest entry charges. If left unclarified, such assumption could lead to undue litigations,”said Saket Patawari – Executive Director, Nexdigm.