With the report of the group of ministers (GoM) on casinos, race courses and online gaming yet to be finalised and two BJP-ruled states going to polls, the Goods and Services Tax (GST) Council meeting has been delayed to November or December, sources said. 

There is a probability that the Council could meet in November after Himachal Pradesh elections on the 12th of the month or meet after the Gujarat elections in early December. The Council meeting, which was originally scheduled to take place in August, could not take place as the GoMs needed more time to firm up their recommendations.

“The date of the Council meeting has not yet been decided. But, it may be held even next month,” an official said.

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With no unanimity about taxing at the rate of 28% on the full value of the consideration, without making a distinction between games of skill or chance, the GoM led by Meghalaya chief minister Conrad Sangma has sought legal opinion on whether the prize money in online gaming and horse racing is covered within “actionable claim” or not, before submitting the additional report. However, so far the report has not been submitted even though the GoM was planning to do so by September 16. The GoM may meet after the Diwali festivities.

The GoM, in its first report, had 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. 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.

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.

On August 18, the GoM on tribunals convened by Haryana deputy chief minister Dushyant Chautala finalised that the GST Appellate Tribunal (GSTAT) be set up with a principal Bench in New Delhi and similar Benches at various states. 

Another key GoM on rationalisation GST rates and slabs headed by Karnataka chief minister B S Bommai is also yet to submit its report. Given GST tax structure overhaul can happen only after inflation is brought under control, the GoM may be given more time to submit its report. 

Besides the GoM reports, the Council may consider pruning the exemption list further and correct the inverted duty structure by increasing the output tax on goods and services, Charanya Lakshmikumaran ,Partner, Lakshmikumaran & Sridharan Attorneys, said.

“Notably, in the recent case of Hero Motocorp Ltd. v. Union of India & Ors., the Supreme Court has recommended the GST Council to consider granting budgetary support to the entities which were availing area-based exemption benefit under the erstwhile excise regime. Thus, it is expected that the GST Council may also consider this recommendation of the Hon’ble Supreme Court,” Lakshmikumaran said.