India is set to impose a 28 percent general sales tax rate (GST) on all online gambling after a group of ministers decided to stand by its earlier decision.
The ministers representing India’s states in June recommended that the GST council impose a flat rate on all forms of gambling, bringing online gambling and casinos on a par with horse racing.
Previously online skill-based gambling firms paid 18 percent on the platform fee and many industry participants warned that raising the level would deal a heavy blow to the nascent sector. The GST ruling also fails to make a distinction between games of skill and games of chance.
The ministers were asked to reconsider their June recommendation following concerns raised by Goa, which is one of only two states in the country to allow land-based casinos.
However, the Financial Express reports that the ministers had been unable to reach a different decision due to divergent opinions.
Racing will continue to be taxed at 28 percent on the full value of bets pooled in the totalisator, while for casinos GST will be applied on the full face value of the chips purchased from the casino by the player, not on gross gambling revenue.
Business Times cited sources as saying there was consensus amongst ministers on the 28 percent levy but no consensus yet on the mechanism valuation. However, the report that will be submitted will have the majority and minority views. If the government goes ahead with a majority; then tax will be on the entire face value or bet amount and not on the net amount after deducting the prize money.