GST Council Likely to Spike Rates on Casino, Horse Betting & Online Games From 18% to 28%: GST Hiked
Highlights regarding the GST Hike :
• Laws related to lottery, betting and gambling in India.
• Response of Supreme Court.
• Group of Ministers reached a consensus.
GAMBLING IN INDIA: A BRIEF
The history of gambling goes as far back as the history of humanity. People have made fortunes out of it at the same time even lost their entire kingdoms. The famous story of Mahabharata is of relevance, where Yudhisthira looses not only his entire kingdom but also his wife.
• Good or bad is not the topic of the debate. What is important to understand is that, it cannot be prohibited completely through imposition of strict laws. On the contrary, if it is regulated by government then it will not only add to state’s treasury but also ensure that only individuals with sound financial backgrounds enter this domain.
• Lottery, betting and gambling is a state subject under the seventh schedule of the Indian constitution . Under this scheme, only state government can legislate on this subject. Goa, Daman & Diu along with Sikkim are the only states and UT’s where Casinos are legal.
• Both Casino and Horse betting presently attracts 18% GST and also other taxations under Section 194B of the Income Tax Act,1961.
• Horse betting is so common that it does not even come under the definition of Gambling. As per Section 12 of the Public Gaming Act 1867, any game of mere skill will not be treated as gambling, but games of chances will be treated as gambling.
SUPREME COURT’S STANCE ON GST HIKE
•Recently , In the case of K.R. Lakshmanan v. State of Tamil Nadu, the apex Court held that horse racing is a game of skill and cannot be deemed to be a game of pure chance and therefore it should not be under the purview of Gambling.
• So, the levy of GST on horse betting itself is doubtful ,as a three-judge bench led by Justice Ashok Bhushan in 2017 in Skill Lotto case clarified that lottery, gambling and betting are taxable under GST as they are “ actionable claims” and come within the definition of “Goods” under section 2(52) of Central Goods and Services Act,2017. But horse racing does not even belong to any of these categories (lottery, gambling or betting).
• So technically even the 18% GST presently levied on horse racing is legally untenable. If the horse racing industry wants to take up their legal battle, they have judicial precedents to support their claim.
• As far as Casinos and Online gaming are concerned, they will have to comply with the decision of GST council, if it agrees to increase to the GST Hike from present 18% to 28. As increasing the tax slabs is a policy decision which can only be decided by the executive.
GOM reached a consensus
• In their recent meeting GoM ( Group of ministers) headed by Meghalaya Chief Minister Conrad Sangma in their report highlighted that horse racing, online gaming or casino, are all part of betting and gambling, and 28 per cent GST should be levied on them.
• The government had in May last year set up Group of Ministers for better valuation of services of casinos, online gaming portals and race courses for levying GST.
• For the time being centre has deferred implementing this suggestion.
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