For the sake of levying (GST) goods and services tax, the government has formed a panel of state ministers to better value the services of online casinos, online gambling portals, and racecourses.

Gambling house dices and chips on table games

The panel will look into the GST value of casino services, the online gaming industry and sports gambling too.

Over the years, taxes on casino earnings are generally implemented globally. The taxable income status acts as an administrative tool.  As far as the real percentage is concerned, the figure has changed over the years. Tax regulations place a 30 per cent tax rate on all casino winnings, lotteries, crossword puzzles, races, poker games, and more (basically all sorts of gaming or sports betting). Operators of offshore casinos are mandatory to deduct 30 per cent tax while making awards to winners if the casino prize money exceeds INR 10,000 (equivalent to GBP 115). 

Apart from this, if a player wins an amount greater than Rs. 10,000, TDS must be deducted by the gambling platform. This law is covered by Section 194B, which has received a lot of attention.

Summoned by the Gujarat Deputy Chief Minister Nitin Patel, the seven-member panel will also look into whether any changes to the law are needed to improve for better means of valuation of these services. 

The perspective of the panel of state ministers 

According to its terms of reference, the group of ministers will "examine the issue of valuation of services provided by casinos, racecourses, and online gaming portals, as well as the taxability of certain transactions in a casino, with reference to current legal provisions and court orders" (ToR).

It will also look into how such valuation provisions are administered and whether an alternative method of valuation is recommended. The panel would also investigate the impact of such valuation on other similarly situated services, such as the lottery.

For better appraisal, the Union Finance Ministry established a panel of state finance ministers.

A seven-member panel of (GoM) Group of Ministers 

The government has set up a seven-member panel of state ministers for better valuation of casinos and other online gaming services.

Other than Gujarat Deputy Chief Minister, Nitin Patel, further members of the (GoM) group of ministers include Maharashtra Deputy Chief Minister Ajit Pawar, West Bengal Finance Minister Amit Mitra, Arunachal Pradesh Deputy Chief Minister Chowna Mein, Goa Transport Minister Mauvin Godinho, Karnataka Home Minister Basavaraj Bommai and Tamil Nadu Finance Minister P. Thiagarajan.

Within six months, the panel would submit its report to the GST Council, which is chaired by the Union Finance Minister and composed of state Finance Ministers.

"In the pandemic period, the online gaming sector, including casino, has seen massive user traction and flow of investments,” the AMRG and Associates Senior Partner, Rajat Mohan told PTI. 

"Online gaming companies are in nascent stages in India, leading to multiple unresolved issues around taxation and valuation, posing a big challenge for the entire industry. Now a GoM has been constituted to understand, examine and resolve the uncertainty surrounding the valuation of services by casinos, racecourses, and online gaming companies," he added.

JustGamblers spoke with Rajat Mohan exclusively

Asked about whether India had any government panel to examine earlier and his opinion if GST valuation should have done earlier, Rajat Mohan, senior partner AMRG & Associates told JustGamblers,

There were government panels before with regards to the casino and online gaming and yes you are right, first you need to understand why it's all happening. So, what happened is there was a lot of confusion with regards to the taxation of online gaming companies, because of the model that they follow.

Rajat Mohan

Subject has a Taxpayer friendly judgement, against which SLP has been rejected by the Supreme Court of India. Now because of this Covid-19 pandemic situation, the online gaming and casino industry erupted like anything due to that flow of investment. Investors are averse to tax risk and thereby these folks went back to the government for long term clarity on the subject

he added

The central and state governments of India back in 2017 implemented the standardised goods and services tax (GST),  which imposes a 28 per cent tax rate on all entertainment events and services, including casinos, racetracks, and their related services.

However, casinos, horse racing, and online gaming services are currently subject to an 18 per cent GST.

The GoM would decide on the method of valuing the services.