GoM on GST for Reconstructed Casinos, Racetracks and Online Gambling

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The Department of Finance has reconstituted the Group of Ministers to review GST issues related to casinos, racetracks and online gambling. However, there is no change in the Terms of Reference (ToR)

Now, Meghalaya CM K Sangama will be the host, replacing Nitin Patel who was sacked from the Gujarat Council of Ministers in September last year. The then Home Minister and current Karnataka Chief Minister Basavaraj Bommai and Arunachal Pradesh Deputy Chief Minister Chowna Mein are no longer part of the group. Uttar Pradesh Finance Minister Suresh Khanna is the newcomer, while Gujarat Finance Minister Kanubhai Patel took over from Nitin Patel. Moreover, West Bengal has a new representative in the group, as Amit Mitra has resigned as finance minister and his place has been taken by his successor, Chandrima Bhattacharya.

This is the second change in the composition of the current group, which was formed on May 24 last year. Interestingly, the group has yet to meet once since forming. The GST rate applicable to online games involving betting or gambling is 28%, and the GST rate applicable to games not involving betting or gambling is 18%.

Questions to consider

According to the terms of reference, the committee must deliberate on four issues. It will examine the valuation of services provided by casinos, racetracks and online gaming portals, as well as the taxation of certain transactions in a casino. This will be done taking into account existing legal provisions and court orders on related matters.

The committee was asked to suggest whether the legal provisions should be amended to adopt better means of promoting these services (casinos, racetracks and online games). It will review the administration of this valuation provision if another means of valuation is recommended. It will also assess the impact on other similar services such as the lottery.

Initially, it was said that the committee would submit its report within six months, which has already been completed.

Earlier, the Ministers Group on the Lottery, formed in January 2019, its report mentioned having received various representations similar to the lottery. It recommended that rate and valuation matters for casinos, horse racing, online gaming and betting could be referred to the Adjustment/Law Committee and then brought to the GST Board, either directly or through the GoM as approved by the Union Finance Minister.

Later, the question figured prominently in the 35 and and 37 and GST Board meeting held on June 21, 2019 and September 20, 2019, respectively. At the June meeting, an agenda item was included to discuss representation regarding value for tax purposes to be defined. It was proposed that the methodology and procedure for determining the face value and amount of the bet to determine the tax could be referred to the Laws Committee. GST rate issues may be referred to the Settlement Committee. The GoM may decide on such related matters in subsequent meetings after receiving appropriate inputs from the law and the adjustment committee.

For the September meeting, the Fitment Committee (a sub-committee of the council made up of officials and preparing a recommendation on the rate proposal) considered a proposal to reduce the GST from 28% to 18% on horse racing betting, in addition to excluding prize money from the taxable value of horse races. The committee recommended deferring the matter and the board went ahead with it. At the next meeting held on March 14, 2020, the matter was discussed. It was said that the GoM on the lottery could not discuss the matter. Then the council decided to refer the matter to the law committee/planning committee.

Published on

February 13, 2022

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