Skill games to garner 18% GST says GST Council

Thu / May / 2017

 

Finally the central government’s plans for implementing the goods and services tax, pan-India has entered its final stage from May 18th to 19th as the fitment for the rates of services have been discussed during the 14th GST Council meeting, that was held in Srinagar.

With the meeting approaching, it almost seemed that the government had already made their mind to put lotteries in the highest GST slab along with other gambling and totalizer services. So, as expected totalizator services along with betting and licensed bookmaker services in the race courses have all been placed under the high GST slab of 28%!

This will also include the entry fees for casinos in the country along with other entertainment event fees, which will also be charged up to 28% of GST slab. There are currently no suggestions to impose any additional cess on betting or gambling activities.

The council has placed different services in 4 different slabs i.e. 5%, 12%, 18% and the highest being 28%. The entry in race courses and IPL matches are set in the highest slab.

As per the current scenario, casinos in Goa pays 15 percent taxes as gaming tax on their revenues while Sikkim casinos pay a 10% gaming tax along with INR 1000 as additional tax payment for every entry.

According to Arun Jaitley the Union Finance Minister, as the entertainment and luxury taxes have been merged with the GST service taxes, then it is only fair to have cinema halls, betting centers and casinos are also placed in the 28% slab.

Glaws.in suggests that online skill games that do not fall under the ambit of gambling may be included in the sector of “all other services not specified elsewhere”. This category subjects to 18% GST rate as opposed to the present 15% service tax, which are being paid operators of online rummy, poker and other fantasy sports. However, it is unlikely for this sector to be impacted heavily in the long-term and there is seamless availability of input credit and fairly easy compliance mechanism.

Industry insiders are not too worried about this taxation slab, as they believe the gaming industry will not be affected adversely, despite this announcement of 28 percent taxation. This is because while this may seem higher than the current rate, but with the easy availability of input credit on GST (something that is not currently available on the entertainment taxes paid by most casinos), the incremental tax burden would eventually get subsidized. This announcement of unified taxation along with the abolition of INR 1000 for entry tax can only be beneficial for the long term.