Ministerial group meeting on online gaming inconclusive over legal issues

Next meeting likely in New Delhi by month end; final report by August 10

The meeting of an empowered group of ministers (GoM) set up to look into online gaming, casinos, and races ended inconclusive on Tuesday beca¬use of certain legal issues. The GoM will now submit the report by August 10, instead of July 15 finalised earlier, one of the panel members said.

The GoM, constituted by the GST Council, met to discuss ambiguities in valuation of services and their taxability. However, the panel is of the view that certain legal aspects should be examined by the law committee of the Council and a final decision would be taken after considering the committee suggestions.

The next meeting of the panel is likely to be held in New Delhi by the end of this month.

The GoM had proposed a flat 28 per cent levy on online gaming and fantasy sports to bring them at par with gambling and betting.

The proposal, however, was opposed by the Goa minister who said taxing the casino on full value would decrease the footfall in tourism and viability of the casino industry. His apprehension was that excessive taxation on casinos would negatively impact the tourism adversely. He argued that incl¬usion of prize money in taxable value could lead to litigations.

“Following Goa’s request for special treatment for casinos, it was decided that GoM will give one more hearing for online games and horse racing as well,” Finance Minister Nirmala Sitharaman had said after the Council meeting last month in Chandigarh.

The GST Council had last month deferred the proposal and asked the panel to re-examine the issues after holding discussions with the states and stakeholders.

At present, the entire transaction value — which includes the winning amount — attracts GST. Most online gaming platforms pay 18 per cent GST as platform fees. The GoM, headed by Meghalaya Chief Minister Conrad Sangma, was tasked with examining the taxation of fantasy sports and casinos. The panel  had suggested that in the case of online gaming, tax should be levied on the “full value” of con-sideration, including the contest entry fee, paid by the player for participation in such games.

With respect to the race course, the panel was of the view that 28 per cent GST should be levied on the full bet value, whereas in the case of casinos, on the value of chips/ coins purchased from the casino by the player.    

Meanwhile, a panel of state ministers on GST rate rationalisation met on Tuesday to discuss the rate slabs restructuring. The seven-member panel, headed by Karnataka Chief minister Basavaraj Bommai, met after the Council meeting held last month. The Council had given nod to all the suggestions proposed by the panel on hiking rates of certain consumer items and doing away with exemptions. The panel is examining the merger of the current four slabs and the possibility of hiking the lower threshold of 5 per cent to 7-8 per cent.