GoM to Meet on May 2 to Discuss GST Related to Casinos, Online Gaming

On May 2, the Union Ministry of Finance’s Group of Ministers (GoM) will meet in Delhi to discuss issues surrounding the GST system, which includes casinos, racetracks, and internet gaming.

The GoM is convened by Meghalaya’s Chief Minister, Conrad Sangma. He took over for Gujarat Finance Minister Nitin Patel, who was removed from the state’s cabinet in a reshuffle in September of last year. Ajit Pawar, Maharashtra’s Deputy Chief Minister, West Bengal Finance Minister Chandrima Bhattacharya, Gujarat Finance Minister Kanubhai Patel, Goa’s Minister for Panchayat Raj Mauvin Godinho, Tamil Nadu Finance Minister Palanivel Thiaga Ragan, Uttar Pradesh Finance Minister Suresh Kumar Khanna, and Telangana Finance Minister Thanneeru Harish Rao are among the other members of the group.

The committee will discuss four topics in India, including casinos, racetracks, and online gaming. The GoM’s mission is to look at the valuation of casino, racetrack, and online gaming services, as well as the taxability of some casino transactions.

On connected concerns, the committee must consider current legal provisions and judicial orders. Naturally, the GoM will offer recommendations for potential adjustments to current legislation in order to apply the new valuing methods that will be used in casinos, racetracks, and online gaming.

The GST Council would take a final decision on the group’s suggestions, Goa minister Mauvin Godinho said ahead of the GoM meeting on May 2 in the national capital. He went on to say that the panel will look into many submissions to the Council that propose taxing the four categories based on gross gaming revenue.

Online games that involve betting are taxed at a rate of 28%, whereas those that do not involve betting or gambling are taxed at 18%.

On May 2, the committee will discuss the administration of valuation provisions and whether an alternate valuation approach might be suggested. It will also assess the impact on similar services, such as the lottery.

Previously, the Group of Ministers on Lotteries, which was established in January 2019, suggested that the rate and value concerns of casinos, horse racing, online gambling, and betting be submitted to the Fitment/Law Committee and then to the GST Council in its report. It had advocated that this be accomplished either by directly addressing the issue or by allowing a GoM appointed by the Union Finance Minister to address the matter.

In 2019, the subject was discussed at length in the 35th GST Council meeting on June 21 and the 37th Council meeting on September 20.

The topic of representation to establish value for taxation purposes was added on the agenda for the June 21 meeting. The proposal included a two-part discussion: the methodology and procedure for assessing face value and bet amount for determining tax, which was referred to the Law Committee, and the problem of the tax level, which was sent to the Fitment Committee.

The Fitment Committee discussed a proposal to reduce horse racing wagering from 28% to 18%, as well as exclude prize money from the taxable value of horse racing, during their September 2019 meeting.

Meanwhile, another GoM tasked with reducing GST rates is still working on a report that will be presented to the GST Council for approval.

Despite the fact that the GST Council is the last arbiter on the vital indirect tax regime, the decision to overhaul tax levels and reallocate goods and services to new slabs is a political decision that the Centre and states must make.

The Centre and the states are under pressure from two major factors. First, rising inflation as a result of increased gasoline and diesel prices can be addressed by lowering taxes. Second, an upward tax rationalization is required to ensure higher revenues as part of the five-year compensation package for states that have suffered revenue losses since the GST regime began in July 2017.

While the five-year deadline expires in July this year, states have been requesting an extension of the compensating cess because they have yet to establish revenue neutrality since the GST was implemented as a single tax for all of India.

Tax rates on over 200 items, ranging from chewing gum to chocolates, to cosmetic products, wigs, and wrist watches, were slashed in November 2017 as part of a massive GST rejig to bring assistance to consumers and companies during the economic downturn. As many as 178 everyday products were relocated from the top tax category of 28 percent to 18 percent at the 23rd GST Council meeting in Guwahati, which was chaired by then-finance minister Arun Jaitley. The GST Council has reduced the number of items in the top 28% GST slab from 228 to just 50 at the time.

Source: India Today