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

Govt Happy with Hike in Collection, No Recommendations Made

The 54th Meeting of the GST Council of India was held and concluded on Monday, the 9th of September, 2024, in New Delhi’s Sushma Swaraj Bhawan, without online gaming being even mentioned in the Council’s 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, but no change of rate or base valuation method was discussed.

GST collection from online money games reached ₹6,909 crore for the six months after 28% GST over the total value of entry-level deposits was implemented on the 1st of October, 2023, forming an increase of 412% compared to the ₹1,349 crore collected for the six-month period before the change.

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

Offshore online gaming and gambling operators, which were obligated to get GST registered in India with the amendments to the GST acts implemented following the recommendations by the 50th and 51st Meetings of the GST Council, were not mentioned in the status report.

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, and according to some media reports, such a review might be made another six months after reviewing the status report.

The next Council Meeting is expected to be held in November to discuss a report by the newly formed GoM on medical insurance-related GST matters, which has to be submitted by the end of October.

Following the presentational part of the press conference after the 54th Meeting, Union FM Nirmala Sitharaman was asked whether “there was any going back on that decision” to increase the GST rate on online gaming, considering the raised concerns that it would “kill the industry” and the over 400% increase in tax collection, which 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 regarding the retrospective GST liabilities of Indian gaming operators and the show cause notices issued to them. “The matter is subjudice,” Malhotra added when asked if there was “any roadmap on how this will be treated.”

The System is Stable vs. Footfalls Have Decreased

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, including revenues up to three or four times higher in some states.

A contrary opinion was put forward by the Chief Minister of Goa, Pramod Sawant, who warned that the hiked tax has already affected footfalls in the state.

“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.

The Chief Minister was immediately attacked for his words by his political opponents in the tourist-oriented coastal state.

“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.