Last week the Tax Reform Council of India, which oversees reforming the country’s taxation system, announced new rates of taxation for the GST (goods and services tax) – 5%, 12%, 18% and 28% that will be imposed from July 1.
The government have been ‘wise’ enough on group gambling and betting in the tax category together with such ‘luxury’ services as five star hotels and even cinemas; and all these businesses will be charged with the tax of 28%. The highest GST rate will also be imposed on prices of admission in casinos and various entertainment events, but they have made no proposal yet on paying additional taxes on betting and gambling activities.
The Union Finance Minister and the Council chairperson Arun Jaitley thinks it is only fair that cinemas, casinos and betting clubs are put in the highest tax group, as taxes on luxury and entertainment activities are already combined with service tax in GST. Presently Goa casinos pay the gaming tax of 15% on their revenues, and casinos in Sikkim are charged the gaming tax of 10%.
At the same time, the online games of skill that are not considered as gambling will be likely placed in the group of other services and will be charged with the goods and services tax of 18%. This rate is not as high as that for gambling activities, but it is still higher than the service tax of 15%, which is now paid by Indian online poker, rummy and fantasy sports businesses.
It should be noted that the Council has not announced yet the taxation rate for lottery distributor services. However, it is reported that the administration is considering imposing the 28% on the $7.78-billion lottery industry.
In the meantime, Indian race businesses have disapproved the decision to place racing in the group of highest taxpayers. Vivek Jain, the chairperson of the Royal Western India Turf Club, named the 28% tax as ‘killer tax’. He is sure that the tax raising policy will make most of the betting businesses find illegal ways to carry on, and that neither race businesses nor the government will be beneficial because of such policy.