54th GST Council Saw No Issues with 28% GST on Money Games

Govt Happy with Hike in Collection, No Recommendations Made

The GST Council of India held and concluded its 54th Meeting on Monday, September 9, 2024. It was held at New Delhi’s Sushma Swaraj Bhawan. The Council did not mention online gaming in its Recommendations.

Still, as Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman, who chaired the Meet, revealed in her press conference afterward, the 54th GST Council did receive and review a status report on indirect taxation on online games, casinos, and horse races. However, they did not discuss any change in the rate or base valuation method.

Online money games generated ₹6,909 crore in GST collection during the six months following the implementation of 28% GST on the total value of entry-level deposits on October 1, 2023. It formed an 412% increase compared to the ₹1,349 crore collected during the six-months before the change.

Simultaneously, tax collection from casinos rose 30%. From ₹164.6 crore for the period April – September 2023 to ₹214 crore for October 2023 – March 2024.

The status report did not mention offshore online gaming and gambling operators. This although they were obligated to register for GST in India. The obligation followed amendments to the GST acts. These amendments were implemented after the recommendations by the 50th and 51st Meetings of the GST Council.

New Review on Entry-Level Levy Not Ruled Out

FM Sitharaman did not rule out a new review of the heavy levy in the future. Some media reports suggest that such a review might occur another six months after reviewing the status report.

The next Council Meeting is expected to take place in November. Here, members will discuss a report by the newly formed GoM. This report focuses on medical insurance-related GST matters that must be submitted by the end of October.

Following the presentation part of the press conference after the 54th Meeting, reporters asked Union FM Nirmala Sitharaman about the decision. The question was whether “there was any going back on that decision” to increase the GST rate on online gaming. This came amid concerns that it would “kill the industry.”

Additionally, there was an over 400% increase in tax collection. This increase showed that the industry and the players had accepted the new levy.

“Well, the Council heard the facts, and that’s where it was left. It was more of a presentation of the current situation because that was a promise given that after six months we’ll review [it]. And it is more than six months now, but we’ve given a picture,” Smt. Sitharaman answered.

“There was no discussion,” Finance Ministry Revenue Secretary Sanjay Malhotra told the attending press representatives. This was regarding the retrospective GST liabilities of Indian gaming operators. He also mentioned the show cause notices issued to them.

Malhotra added that “the matter is subjudice.” This was his response to a question about “any roadmap on how this will be treated.”

The System is Stable

Krishna Byre Gowda, Minister of Revenue in the Government of Karnataka, who represented his state at the 54th GST Council Meeting, expressed his contentment with the implementation of the Good and Services Tax on money games.

“The system has stabilised. It’s working well. There’s no justification for re-examining the method of GST on online gaming,” Minister Gowda told the media on the day of the Meeting.

According to Gowda, all earlier concerns that the heightened GST would exterminate the homegrown industry had turned out to be “imaginary.” Karnataka’s Revenue Minister further claimed that the whole sector was declaring higher turnovers. This includes revenues up to three or four times higher in some states.

The Chief Minister of Goa, Pramod Sawant, put forward a contrary opinion. He warned that the hiked tax has already affected footfalls in the state.

But Footfalls Have Decreased

“Overall footfall has been affected. People who were coming to Goa only to visit or play in casinos are now preferring to go to countries like Sri Lanka,” Sawant said after the 54th GST Meet.

Political opponents in the tourist-oriented coastal state immediately attacked the Chief Minister for his words.

“It is surprising that instead recovering dues from casinos, Chief Minister Pramod Sawant is keen to help them by excluding from GST, that too on the pretext of tourism footfall. Does he want to prove that the tourism sector is dependent only on casinos? Why so much love for casinos and not revenue generation to boost coffers,” Leader of Opposition in the Goa Legislative Assembly Yuri Alemao told reporters on Wednesday, the 11th of September.

Alemao continued his charge by bringing up past instances where the CM’s cabinet allegedly failed to prevent foreign casinos from advertising in Goa.

“These casinos were advertising in the State by violating Section 12 of Goa Daman and Diu Gambling Act but there was no action by the government. The concerned departments have completely failed to tackle such menace. The BJP government is helping them to promote business illegally,” Yuri Alemao said.

“If tourism footfall is dependent on casinos, then Chief Minister Pramod Sawant admits that Home Stay and Caravan policies have failed, and also if eco-tourism, wellness Ayurveda, spiritual tourism, sports tourism, monsoon trekking failed to attract tourists,” the Opposition MLA continued.