There was a mixed reaction after the all-powerful Goods and Services Tax (GST) Council on Tuesday decided to impose a 28 per cent tax on the turnover of online gaming companies, horse racing and casinos.
The panel, headed by the Union finance minister and comprising of representatives of all states and UTs, also lowered the service tax levied on food and beverages consumed in cinema halls to 5 per cent and tweaked the definition of an SUV for attracting a cess over and above the GST rate.
While it was a status quo for the horse racing as they have been paying the same amount, but for the Federation of Indian Fantasy Sports was a disappointed lot.
The tax rate was decided based on the recommendation of a group of ministers that looked at taxing casinos, horse racing and online gaming.
The issue before the GoM (group of ministers) was whether to impose a 28 percent GST on the face value of bets, or gross gaming revenue, or just on platform fees.
Sitharaman said the tax will be levied on the entire value.
The tax on online gaming companies would be imposed without making any differentiation based on whether the games required skill or were based on chance.
To the concerns of the gaming industry that tax on entire value would kill the industry, she said, "we are not killing any industry" but gaming and gambling cannot be given a treatment lesser than essential industry.
"So the moral question was also discussed (at the Council meeting on Wednesday). It does not mean they should be promoted more than essential industries," she said.
“It is a status quo for us as we have been paying the same amount on protest and this will not effect us, as we have the market support,” said Sunil G Jhangiani, from the Royal Western India Turf Club while talking to FPJ on Tuesday.
Fedration of Indian Fantasy Sports predicts 'irreversible damage to the industry':
“We are disappointed that the GST Council and authorities have chosen to apply 28% GST on the total entry amount including prize money,” said Joy Bhattacharjya, Director-General, Federation of Indian Fantasy Sports (FIFS).
“As pointed out by FIFS and many of its members on numerous occasions, change in valuation to tax on the total consideration will cause irreversible damage to the industry, loss of revenue to the exchequer and loss of employment for lakhs of skilled engineers. Needless to add, this decision will have a chilling effect on the USD 2.5 billion of FDI already invested by investors and jeopardize potentially any further FDI in the sector,” he added.
And went on to add, this decision will shift users to illegal betting platforms leading to user risk and loss of revenue for the government. We humbly request the GST Council and the Government of India to reconsider this decision”.
