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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, is set to recommend 28% GST rate on these.

Sangma said in a social media post on Wednesday that the group of ministers has come to a consensus. The report of the GoM’s submissions will be handed over to finance minister Nirmala Sitharaman in a day or two and the matter will be presented in the next GST Council meeting, Sangma said in the post without referring to the tax rate the committee will propose. A person informed about the discussions in the ministerial group said the consensus was for a 28% GST rate on these items. The report will specify the base on which the tax rate will apply.

Currently, casinos, racecourses and online gaming firms are paying 18% GST, backed by court orders in the absence of clarity on the subject. Businesses claim that these are games of skill rather than betting or gambling.

Earlier this month, Sangma had told Mint that 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,“ he said then.

Experts, however, expressed concern over the highest slab being proposed on these activities.

“Keeping game of skill and game of chance at par and taxing both the games at sin rate of 28% will be detrimental to the nascent Indian online gaming sector," said L Badri Narayanan Executive Partner at Lakshimkumaran and Sridharan Attorneys. Experts are awaiting details of the valuation on which the tax rate will apply.

“It is important for the GST Council to adopt appropriate GST rate and valuation mechanism. The well-established legal jurisprudence of the Supreme Court treating game of skill different from game of chance, should be taken into account by the Council before determining GST rates and valuation mechanism," said Narayanan. An email sent to the GST Council on Wednesday seeking comments for the story remained unanswered at the time of publishing.

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