NEW DELHI: Nearly eight in 10 respondents want the goods and services tax (GST) rate on online gaming, casinos and horse racing to be 28% or higher, according to an online survey by LocalCircles. Currently, casinos, race course and online gaming are paying 18% GST. 

Moreover, 7% of the respondents voted for a 40% tax slab, 27% voted for over 50%. Only 1% of the respondents believed that online gaming, casino and horse racing should be exempted from GST, while 6% did not have an opinion on it. This question in the survey received 12,097 responses. 

The GST Council comprising a group of ministers (GoM), led by Meghalaya chief minister Congrad Sangma, has agreed to recommend hiking the GST rate on casino, race course and online gaming services to 28%. However, this is subject to final approval of the GST council. 

The panel of ministers has decided that the tax will be levied on the entire “face value” or “bet amount” and not on total transaction value. Total transaction value includes the prize money, or the net commissions (revenues) that accrue to gaming firms. 

These recommendations will be sent to the Goods & Services Tax (GST) council for approval. 

With more and more fantasy gaming mobile applications and websites emerging as significant players in the online gaming and sports entertainment sector, the position of law with respect to legality of online fantasy gaming is an important aspect of gaming law in contemporary times. One of the most crucial parameters in determining the legality of online fantasy games is whether such a game is predominantly a ‘game of skill’ or a ‘game of chance.' 

In absence of a unified code on gaming, different courts have taken differing views on how to treat online games. GST authorities, meanwhile, have issued notices to various industry players, proposing to recover incremental GST owing to the valuation dispute. 

"A centralised regulatory body or framework to overlook the online gaming industry would help to ensure uniformity in application of law across the states, " according to Adarsh Somani ( partner) and Sahil Kothari (principal associate) at Economic Laws Practice. 

However, the online gaming industry that operates games like e-sports, rummy, poker, chess, and fantasy games has been lobbying for GST to be capped under 18%. 

60% want higher tax on cryptos

And like online gaming, 60% citizens want the GST rate on cryptocurrencies to be 28% or higher. The GST council is also considering a similar 28% tax on cryptocurrencies. 

Over seven in 10 citizens are against a hike in the Good and Services Tax (GST) from 5 to 7-8% and from 18 to 20%. The study received over 34,000 responses from citizens in 319 districts of India. 

"Given the high inflation and 7 in 10 households in the country facing a squeeze, any change in the 5% rate structure to 7-8% will have a direct impact on household budgets and hence majority of the household consumers are explicitly against such an increase. Similarly, in the case of services according to people, the 18% GST rate leads to high evasion where most small and even mid-size contractors do not issue a GST invoice and take payments in cash or in bank accounts of family members. By increasing tax on services from 18% to 20% there is a high risk that most people will likely avoid GST invoices with largely only leaving businesses paying the higher rate of 20%," said the survey. 

Seventy one per cent of those surveyed were also against raising the GST of household items such as shampoos, hair oil, toothpaste etc. 

Majority of the households are instead seeking a relief in GST rates given the high levels of inflation with 70% reporting an over 10% increase in monthly costs in May.