The ministerial panel formed for casinos, race courses and online gaming under the Goods and Services Tax (GST) regime is likely to fall back on the initial report presented before the GST Council in June. Officials aware about the panel’s deliberations said that no major change is expected in the earlier submitted report and the inputs from the discussions of the officials and Group of Ministers (GoM) held after June are likely to be incorporated as additional comments in the report.

“It is unlikely that there will be any major change. The committee may go back to the first report itself,” the official said. Though the discussions have centred on defining game of skill and game of chance, another emerging view is that the tax authorities could possibly look at defining gaming as a service rather than the present status of it being an actionable claim.

“Tax authorities should try to focus on the taxation aspect of it and not define it as restrictive or prohibitive, which is relevant to betting and gambling. The definition of online gaming as an actionable claim should be revisited by exercising power under Section 7 of CGST Act. Then it can be declared as a service like construction which is a service and then levy whatever rate is to be charged.” “From taxation point of view, whether it is betting or game of skill, tax prescription should not be based on a chance outcome or a skill outcome. One rate should be levied, whether it is 18 per cent or 28 per cent plus cess, or it could be levied on gross gaming revenue, so that should be a policy call. But it’s time the debate over game of chance or game of skill gets over, otherwise no clarity will emerge,” a person aware about the discussions said.

The eight-member ministerial panel, headed by Meghalaya Chief Minister Conrad Sangma, had earlier submitted a report to the Council which was taken up for discussion in the June meeting. The GoM had recommended a uniform rate of 28 per cent on casinos, race courses and online gaming with no distinction based on whether an activity is a game of skill of chance or both. For valuation in case of casinos, the GoM had suggested that GST be applied at 28 per cent on full face value of the chips/coins purchased from casino by a player and that once GST is levied on purchase of chips/coins (face value), no further GST would apply on the value of bets placed in each round of betting including those played with winnings of previous rounds. It also suggested 28 per cent GST on services by way of access/entry to casinos on payment of consideration/entry fee which compulsorily includes price of one or more supplies such as food, beverages etc.

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In its two meetings held in May this year, the GoM held the “general view that these activities because of their nature and negative externalities should be levied a higher incidence of tax” and that these activities involve “financial risk and are addictive”. After the 47th GST Council meeting held in June, the GoM was given a 15-day extension with concerns raised primarily by one state — Goa. After the meeting, Union Finance Minister Nirmala Sitharaman had then said that even as the Chair of the GoM, Meghalaya Chief Minister Conrad Sangma, presented his report, he requested that the Minister of Goa (Mauvin Godinho, Goa’s Minister for Transport, Industries and Panchayats Raj and Goa’s Member of GST Council) will place his view before the Council and not just the GoM. The GoM had last met in September, wherein divergent views emerged regarding the valuation mechanism for casinos, horse racing and gaming.

The Council which was earlier scheduled to hold its 48th meeting in August has not met since June. The final reports by several GoMs are awaited. Though the GoM on Goods and Services Tax Appellate Tribunal has finalised its recommendations, the GoM on rate rationalisation has not finalised its report. The next Council meeting is now likely to be held after the upcoming state elections of Himachal Pradesh and Gujarat.