Casino, horse racing, and online gaming services are currently subject to 18% GST. The technique for valuing the services would be chosen by the GoM.
A proposal from the group of state finance ministers to collect a 28% GST on online gaming, casinos, and horse racing is expected to be reviewed by the GST Council at its meeting this week, according to sources.
Online gaming should be taxed at the entire value of the consideration, including the contest entry fee paid by the player upon participation in the game, according to a recommendation made by the Group of Ministers led by Meghalaya Chief Minister Conrad Sangma.
The GoM has proposed that GST be applied to the whole value of bets placed with bookmakers and pooled in totalisators on racetracks.
In casinos, GoM recommended that the tax be levied on the entire face value of the chips or coins purchased from the establishment. The value of bets put in each round of betting, including those placed using winnings from earlier rounds, would not be subject to further GST.
The GoM has proposed adding a 28% Goods and Services Tax to entry/access fees to casinos, which automatically includes food,However, optional supplies, made independently of the entry tickets, would be taxed at the rate applicable on such supplies, sources added.
Currently, services of casinos, horse racing and online gaming attract 18 per cent GST. The GoM would decide on the method of valuing the services.
The Government had in May last year set up a panel of state ministers for better valuation of services of Casinos, online gaming portal and race courses for levying Goods and Services Tax (GST).
AMRG & Associates Senior Partner Rajat Mohan said 28 per cent tax bracket for online gaming, horse racing, and casinos would peg them at par with numerous sin goods like pan masala, tobacco and aerated waters.
“Taxing online gaming, horse racing, and casinos at gross revenue instead of net value addition would be a departure from the global tax ethics,” Mohan said.
This proposal may sweeten the exchequer for a while; however, it would also entice the unorganized sector leading to rampant generation of black money in the long term, he added.
The report of the GoM is likely to be taken up in the next meeting of the GST Council on June 28-29 in Chandigarh. The other state ministers in the 8-member GoM include Maharashtra Deputy Chief Minister Ajit Pawar, Gujarat Finance Minister Kanubhai Patel, Goa Panchayati raj Minister Mauvin Godinho, Tamil Nadu Finance Minister P Thiaga Rajan, Uttar Pradesh Finance Minister Suresh Khanna and Telangana Finance Minister T Harish Rao.