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GST council announces 28% tax on casinos and betting; 18% tax likely on skill games; lottery tax yet to be announced

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The GST Council, a constitutional body has announced tax slabs for most goods and services in the council meeting held in Srinagar on 18th and 19th May. As widely predicted, gambling and totalisator services provided by a race course as well as betting with licensed bookmakers in race courses have been placed in the 28% tax slab.

Further, entry fees charged in casinos or other entertainment events will also be charged 28% GST. It is understood that at present, there is no proposal to impose an additional cess on gambling and betting activities.

Union Finance Minister Arun Jaitley in his press conference yesterday indicated that since entertainment and luxury taxes have been merged with service tax in GST, it would only be fair that cinema halls, casinos and betting centres are placed in the highest tax slab of 28%. Currently, casinos in Goa pay a 15% gaming tax on their revenues while casinos in Sikkim pay a 10% gaming tax, in addition to a Rs. 1,000/- tax on the entry of every visitor.

While the 28% tax may prime facie seem higher than the current taxes paid by casinos, industry experts believe that with the availability of input credit on the goods and services (which at present is not available on the entertainment taxes paid by casinos) and with the abolition of the Rs. 1,000/- entry tax,  the gambling business may not be affected by the announcement of the GST council.

Experts further believe that the announcement of a unified taxation system for the gaming industry will only be beneficial in the long term.

Online skill games, which do not fall within the ambit of gambling could fall within the category of  ‘all other services not specified elsewhere’ and be subject to a 18% GST rate. Again, while this is slightly higher than the 15% service tax currently paid by online rummy, poker and fantasy sports operators, with the seamless availability of input credit and easier compliance mechanism, the sector may not be significantly impacted in the long term.

It is understood that the taxation rate on lottery tickets or service provided by lottery distributors has not been announced by the GST council. A decision on the taxation rate for lotteries is expected in the coming weeks. However, since lotteries fall within the definition of actionable claims, which have been categorised as goods under the GST law, it is believed that lotteries would fall within the 28% tax bracket.

Jay has researched extensively on gaming laws and has been cited by various media houses and journals as an expert. He has helped leading newspapers in their stories on gaming laws. Jay completed his B.A. LL.B. (Hons.) degree from NUJS, Kolkata in 2015 and is currently based out of Mumbai.