Approach:

• Introduce with the suggestion of 28% GST to casinos, racecourses, and online gaming by GoM.
• In the body part, state the reasons and issues raised by stakeholders.
• Conclude by highlighting the stand of the GoM in the recent meeting.

Answer:

The panel of state finance ministers is likely to recommend a uniform GST levy of 28 % on online gaming irrespective of whether it is a game of skill or a game of chance. The GoM deliberated on separate definitions for 'games of skill' and 'games of chance’, but has settled for a uniform slab for both.

Most states agree on a 28% tax rate for gaming considering it as a service like that of casinos but differ on the valuation mechanism. West Bengal and Uttar Pradesh support taxing the total value, while Goa recommends a tax on the entry point for casinos.

Online gaming witnessed a spurt during the lockdown with the number of users in India rising substantially. As per a KPMG report, the online gaming sector would grow to Rs 29,000 crore by 2024-25 from Rs 13,600 crore in 2021. Stakeholders from inside the industry have suggested keeping the slab at 18% looking at the potential of the sector and initiatives like StartUp India, where it can play a major role. Currently, online gaming attracts 18 per cent GST. The tax is levied on gross gaming revenue, which is the fees charged by online gaming portals.

However, the GoM has suggested that online gaming is a demerit good and charging 28% in parity with casinos and the racecourse will bring uniformity in the GST slab. However, some relaxation in valuation methods could be provided.