*GST Council decides not to change 28% taxation on all forms of gambling – The Economic Times

Clipped from: https://economictimes.indiatimes.com/opinion/et-editorial/gst-council-decides-not-to-change-28-taxation-on-all-forms-of-gambling/articleshow/92661843.cms

Synopsis

​​The online gaming industry has sought to delineate games of skill and chance it serves up. High courts in several states have overturned blanket bans on online gaming as the latter did not distinguish between the two and this may call for differential tax treatment. The issue is further complicated by the preponderance of skill in games that involve the exchange of money.

The Goods and Services Tax (GST) Council has asked a ministerial panel drawing up GST slabs on gambling to review a limited point about the application of the proposed 28% rate on the use of chips bought in a casino. Chips serve as currency on the casino floor and can be used for purposes other than trying one’s luck, such as ordering a drink.

This is a distinction that casinos enjoy over other forms of gambling like horse-racing and online gaming, where the highest GST slab has been recommended on the platform fee as well as the prize money. Arguments made against this veer around excessive taxation pushing these activities beyond Indian jurisdiction where the incidence of tax is not as onerous.

Turf clubs and online gaming companies have made this representation to the group of ministers deliberating the matter. Horse-racing clubs have highlighted their long pedigree as not-for-profit organisations that plough back monies into keeping the sport alive.

The online gaming industry has sought to delineate games of skill and chance it serves up. High courts in several states have overturned blanket bans on online gaming as the latter did not distinguish between the two and this may call for differential tax treatment. The issue is further complicated by the preponderance of skill in games that involve the exchange of money. There is also a case made out for expanding the ecosystem for augmented reality and virtual reality, which are driving user engagement on the internet as social engagement plateaus.

Tax can be as blunt a tool in regulating gambling as a ban. The interests of this segment would be better served by a gaming commission better qualified to look into aspects of concern of financial regulators, such as money laundering.

As both games of skill and chance move increasingly online, India needs legislation to regulate entities incorporated abroad when operating here. States have been dealing with it in their own capacity. But the nature of the industry has changed significantly and it calls for a concerted approach.

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