GST clarity on cards for online gaming, casinos and racecourses

In a major relief for the online gaming industry, casinos and racecourses operating in the country, the GST Secretariat has asked the GST Council to provide clarity on the GST rate and the applicability of the levy on these services reported CNBCTV18. This follows a recent directive dated September 29 from the Punjab Haryana High Court (PHHC) on the matter. The PHHC had directed the GST department to take no coercive action on an online gaming company against the demand notices until the Group of Ministers (GoM) constituted to examine the issues provides clarity.

The GST Council had constituted a 7 member GoM in May headed by the then Gujarat Deputy Chief Minister Nitin Patel to examine whether any change in legal provisions is required for valuation of services provided by online gaming, racecourses, and casinos. The GST Council had set four-point terms of reference for the GoM which includes examining the taxability of certain transactions in casinos. The GoM was later increased in June to 8 members with the addition of the Telangana finance minister.

The GoM was supposed to submit its report within six months. Considering Nitin Patel is no more in the Gujarat cabinet, the time limit for submission of the report by GoM was expected to be extended. However, as per government sources cited by CNBCTV18, the GST Secretariat has asked the GoM to fast-track their recommendations in the backdrop of the order from PHHC.

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The valuation of supplies in the casino and gaming industry has been a contentious issue ever since the introduction of GST in 2017. In many instances, the casino operators are compelled to pay 28% GST on entire bet amounts while commission or processing charges are the only amounts they are finally entitled to.

It is noteworthy that the casino industry is lobbying with the Goa government to get clarity on the issue plaguing the industry ever since the introduction of GST. Few casinos have also approached Bombay High Court against notices served by the GST department challenging undue demand.

GST Secretariat has approached the 8-member Group of ministers to fastrack their recommendations following Punjab Haryana High court order. The GST Council had nominated a GOM on the matter, headed by Gujarat Dy CM – Nitin Bhai Patel which was initially constituted in May and had a 6-month timeframe to come up with recommendations. The GOM was then reconstituted in June. Goa has a major role to play in this as the casino industry had been pitching to Goa government to get the GST council clarity on the issue,” sources privy of the development were quoted by CNBCTV18.