Skill games put under 18% GST slab, Casinos taxed under 28% GST

Here is some major news for all Indian poker enthusiasts. The country-wide Goods and Services Tax (GST) is finally almost set to be implemented and is currently in its last stage with rate fitment of services from 18th May to 19th May underway at the 14th GST Council meeting that was held in Srinagar.

The government had made its mind about putting lotteries in with the highest GST slab and as expected the gambling and totalizator services offered by race courses have been placed in the 28 percent GST slab along with licensed bookmakers. Moreover, the entry fees of the casinos within the country along with other entertainment events will also be charged as per their 28 percent GST rating. Presently there is no proposition to add any additional cess on gambling and betting activities.

The GST Council has placed a range of services under the 4 slabs that are 5%, 12%, 18% and 28% along with entry into events like IPL matches and race courses set at 28% GST slab.

Now the casinos of Goa and Sikkim pay 15% and 10% gaming tax along with INR 1000 as additional tax on each entry. Union Minister Arun Jaitley said that since the entertainment and luxury taxes have been merged with the service tax in GST under the category of luxury and entertainment, so it is only fair that cinema halls, casinos and betting centers should also be placed under this same 28% slab. further clarified saying that online skill games like online poker freerolls which do not fall under the gambit of gambling would fall under “all other services not specified elsewhere” category which will be subjected to 18% GST rating, presently 15% service tax is being paid by online rummy, poker, and other fantasy sports operators. However, industry insiders believe that this taxation will not have a severe impact in the long-term for online poker and other fantasy games, due to the easy availability of input credit and fairly simple compliance mechanism.

As for gambling businesses while the announcement of 28% tax may seem too big a jump from the current tax rate but with the availability of input credit on goods and services something that is presently not available with the casinos with the entertainment taxes they pay, so, the incremental tax burden should somewhat get lowered in the long run. The abolition of INR 1000 additional tax payment for each entry is another advantage with GST which will be of value in the long term.

With growing popularity and demand of poker in India, the new GST scheme will hopefully take the poker industry forward in the coming years.

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