The Indian government wants to increase the tax on internet gambling from 18 to 28%.
A Group of Ministers (GoM) mandated by the Goods and Services Tax Council in India has suggested increasing the goods and services tax (GST) on online gambling from 18 to 28%. The GoM, led by Meghalaya's chief minister Conrad Sangma, addressed the valuation of casino and internet gambling services on Wednesday.
The GoM had previously convened on May 2, and while there was general agreement on a flat tax rate of 28%, there was no agreement on whether it should be imposed on total gaming income or per transaction. According to Economic Times, a final recommendation report on the topic is anticipated to be delivered within a week for discussion at the upcoming GST council meeting.
Currently, internet gaming that does not involve betting or gambling is taxed at 18 percent of the platform charge, whereas chance gaming including racing, betting, and lotteries is taxed at 28 percent of the contest entry value.
The gambling sector has urged the government to maintain the 18% online gaming tax rate, arguing that a higher GST rate would render the whole online gaming industry unprofitable. However, the GoM on the taxation of casinos, racetracks, and internet gambling intends to equalise the tax rate for skill games and chance games.
As stated by Financial Express, specialists believe that modifications to the GST legislation may be necessary to achieve equity in the taxes of online gambling and chance gaming.
Industry group IndiaTech.org has proposed that only gross gaming revenue (GGR or platform fee) should continue to be recognised as the supply's value, as is the standard practise. Additionally, GST should be relevant if platforms utilise other formats/income models, such as subscription fees, in-game revenue, etc.
“It is pertinent to note that the technology platform owner has no right, title, or interest over the prize pool amount,” said Rameesh Kailasam, CEO, IndiaTech.Org.
"IndiatTech.org has recommended that games involving predominance of skill should ideally be taxed at 18% on the platform fee as applicable for entry HS Code 998439 as other online content not elsewhere classified (NEC). Higher tax rates will adversely impact the growth of the industry. Leading global regulated markets including the UK, most countries in the EU and Nevada, and New Jersey in the US, tax GGR at the rate of 15% to 20%. In the year 2000, the UK moved from a 6.5% tax on stakes to a 15% tax on GGR, creating over the next 18 years the largest and most sustainable gaming market in the world," Kailasam said.
By fLEXI tEAM