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NEW DELHI : A group of ministers led by Meghalaya chief minister Congrad Sangma that is advising the GST Council on the taxation of casinos, race courses and online gaming which met in the capital on Monday, will meet again later this month to finalise its tax proposals to the Council, Sangma said after the meeting. 

The Council is currently examining what should be the tax rate on these and in the case of online gaming, what should be the valuation on which the tax rate to be decided should apply, explained Sangma. He said that at the meeting, discussions were held in detail about these issues and certain technical aspects needed to be discussed further. 

At present, casinos, race courses and online gaming firms are paying 18% GST, a practice backed by court orders in the absence of clarity on the subject. The applicability of 18% tax is backed by the claim that these are games of skill rather than betting or gambling.

The panel of state finance ministers is unanimous on hiking the GST rate on these to 28%, news agency PTI reported quoting West Bengal finance minister Chandrima Bhattacharya. However, a call on whether the tax should be levied on gross or net valuation would be taken after further deliberations at the officer level, said the PTI report.

Sangma said after the meeting held in the capital that bringing clarity on various aspects of taxation will benefit these sectors.

“This is a very important issue… We are trying to take a decision at the earliest. Today, we have managed to move the discussion forward to a large extent and the issues related to the rates and the valuation on which the rate should apply and certain issues of online gaming were discussed in detail," said Sangma. 

He said the ministerial group broadly has a consensus and a decision but there are a few more technical aspects to be decided on. “Therefore we are going to meet once more to take all the views of the decision that we in likelihood will take and will take a call. The next meeting of the GoM should be around the second or third week of May," explained Sangma. 

Sangma said that all aspects and suggestions received by the ministerial panel are being looked into. “The issues involved include, which rate should apply on different activities; should there be a differentiation of the activities or not, and what is the valuation on which you apply the rate," he said. 

“It impacts a large number of industries and companies, therefore we need to keep in mind all stakeholders in mind and take the best decision..The size of the industry is huge. The online gaming industry is almost touching 30,000 crore annually. It is seeing 20-30% growth every year. Therefore we need to take the right decision," explained the chief minister.

According to Ankur Gupta, practice leader (indirect tax), SW India, a taxation and consulting firm, the current tax rate is 18% and is levied on the platform/access fee charged by the online gaming company. “It seems that the group of ministers is considering keeping online gaming, casinos and horse racing in same bracket of 28%. This would hit the online gaming industry very hard. While the other two would still be gambling activities and hence, sin tax of 28% can be applied, however, most of online gaming cannot be considered as gambling activity," said Gupta. He said that clubbing gaming with other two would impact the entire business model of the gaming industry.

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