GST Council constitutes GoM to look into online gaming, race courses, casinos
The Goods and Service Tax Council has constituted a group of ministers (GoM) to examine whether any change in legal provisions is required for valuation of services provided by online gaming, race courses and casinos.
The Council has set four-point terms of reference for the GoM which will include examining the taxability of certain transactions in casinos related to present legal provisions and orders of Courts.
“To examine whether any change is required in legal provisions to adopt any better means of valuation of these services,” the terms state. The GoM will also examine the administration of alternative valuation provisions if recommended.
Impact of similarly placed services, such as lottery, will also be examined by the GoM.
The seven-member GoM, headed by Gujarat deputy chief minister Nitin Patel, will have to give its recommendations within six months, as per an office memorandum issued Monday.
Other members of the GoM include deputy chief minister of Maharashtra Ajit Pawar and deputy chief minister of Arunachal Pradesh Chowna Mein, besides finance ministers of Tamil Nadu and West Bengal. Goa transport minister and Karnataka home affairs minister are also part of the GoM.
Taxation on online games has been a contentious issue. According to a recent Maharashtra Authority of Advance Ruling (AAR) ruling, online games are classifiable under online information and data-based access or retrieval services or OIDAR services, under GST which is taxable even if the cloud is located outside India. However, contention is open on whether recent games like Dream 11 that offer fantasy sports gaming services qualify as a game of skill or gambling.
“Applicability of GST on online gaming, classification of the same as game of skill vs game of chance, taxable value on which GST needs to be paid i.e. gross value including prize money vs. only platform fees etc. are areas which require clarifications, and hence the initiative by the government to form a GoM to look into all these issues,” said Harpreet Singh, indirect tax partner at KPMG India.
In case of race courses, the tax is payable on the small fees charged by race courses for participation and not on the win money, said experts.