The GST Council is expected to decide on whether these three activities fall under the category of actionable claims of betting and gambling
The GoM on online gaming, horse racing and casinos had a broad agreement that a 28 per cent GST should be levied on all three supplies but a consensus eluded on the taxability of online games, as Goa suggested an 18 per cent tax on platform fees, according to a PTI report quoting sources.
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A final view on taxation rate as well as whether tax is to be levied on gross gaming revenue (GGR) or fees charged by the platform; or on the full face value of bets put in by players of online gaming, horse racing and casinos would be taken by the GST Council on July 11.
Also, the GST Council, chaired by the Union finance minister and comprising state counterparts, has to decide on whether these three activities fall under the category of actionable claims of betting and gambling.
The Group of Ministers, convened by Meghalaya Chief Minister Conrad Sangma, has members from eight states- West Bengal, Uttar Pradesh, Goa, Tamil Nadu, Telangana, Gujarat and Maharashtra.
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Of the eight states, West Bengal and Uttar Pradesh were of the view that a 28 per cent GST should be levied on all three supplies on full face value of the bets placed. Gujarat, however, was of the view that 28 per cent tax should be levied on platform fees.
Meghalaya was of the view that a 28 per cent tax should be levied on GGR or platform fees or commission charged by casinos, online gaming and horse racing. It also suggested that a special mechanism to carve out an ‘Escrow Account’ for the purpose of pooling in prize money for payout to winners would make administration of the tax easier.
While Goa suggested a 28 per cent tax on gross gaming revenue of casinos, it said an 18 per cent GST on platform fee/service charge levied by platform operators, Goa said.
Goa also suggested that contributions to the prize pool may be treated as supply not liable for GST levy.
Tamil Nadu and Telangana have suggested that if the GST Council decides that the three activities are not actionable claims of betting and gambling, then 28 per cent tax should be levied on GGR.
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Maharashtra, while suggesting a 28 per cent rate for all three supplies, said there should also be no differentiation in taxation on the basis of whether the activities are games of skill or chance and the valuation rules should reflect the same.
It proposed that a suitable abatement be provided for determining the taxable value of supply of the actionable claim. An actionable claim is typically referred to as a claim of debt.
In view of the divergence in views of the members, the GoM has left it on the GST Council to decide on the final taxation rate as well as valuation.
The GoM in its first report submitted to the GST Council in June 2022, had suggested that 28 per cent Goods and Services Tax (GST) be levied on full value of the bets placed, including the contest entry fee paid by the player on participating in the game. In cases of race courses, the GoM recommended that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers.
After the 47th GST Council meeting at June-end, Union Finance Minister Nirmala Sitharaman said the Council was of the prima-facie view that the common thread connecting them is that these activities are in nature of “gambling” and should be taxed accordingly.
She added that the Goa chief minister was of the view that casino should be treated differently than the other activities — horse racing, online gaming and lottery.
(With Inputs From PTI)
