A panel of state ministers has been convened to review the current “valuation of services” of casinos, online gaming and race courses as they relate to the goods and services tax (GST).
The seven-member group of ministers (GoM) will reportedly “examine the issue of valuation of services provided by casinos, race courses, and online gaming portals and taxability of certain transactions in a casino, with a reference to the current legal provisions and order of courts.”
GST review can be a step toward gambling legalization
The panel will also set out to review how the value provisions on services of casinos and race courses are administered, if an alternative is needed, and also how those valuation impacts other similarly placed services like lottery. The GoM has six months to compile and submit its report to the GST Council, which is chaired by the Union finance minister and some state finance ministers.
If done correctly, this can be the much-needed step towards the uniform legalization of India’s gambling industry.
“Online gaming companies are in nascent stages in India, leading to multiple unresolved issues around taxation and valuation, posing a big challenge for the entire industry. Now a GoM [Group of Ministers] has been constituted to understand, examine and resolve the uncertainty surrounding the valuation of services by casinos, race courses, and online gaming companies,” AMRG and Associated senior partner Rajat Mohan said, according to the Times of India report.
Regulation tackles taxation issues too
“A regulated market is better than an illegally functioning one,” researchers at SevenJackpots noted in their report, titled “When Should an Industry Regulate.”
“Transparent regulation will help the best gambling platforms prove their integrity to the public eye. Formal guidelines on online gambling will improve the business climate and bring benefits to state coffers.”
Regulation brings transparency to India’s much-loved gambling market, which, in turn, can lead to better consumer protection and more investments—resulting in improved tax collection for the government.
Currently, the country’s taxation requirements and categories are based on the Public Gaming Act of 1867, with a number of legislative acts serving as other bases of India’s gambling taxation. There’s also Section 115BB of the Income Tax Act of 1961, which specifies that any winnings from lotteries, crossword puzzles, race betting, card games like Andar Bahar, Teen Patti, online rummy, and other games, as well as gambling or betting of any form or nature has a flat rate of 30% tax. These include games featured on SevenJackpots casino comparison platform and other casual gambling sites like Purewin.com.
The standardized GST, on the other hand, places a 28% tax rate on all entertainment events and services including casinos and race courses, and their related services. With India’s betting market estimated to be at INR 9,50,000 crore and online gaming is calculated to be worth INR 20,500 crore, there’s no denying that a uniform, transparent legislation regulation will be a boon to India’s coffers.
Law firm Touchstone Partners is already reviewing the legal landscape of online gambling in the country, an initiative it has undertaken in partnership with ENV Media. Partner Uday Walia said Touchstone Partners sees the opportunities India’s rapidly growing betting market can provide.
“We are hopeful that the Indian regulatory framework will be amended to encourage additional participation, not least because as a country we have much to gain from regulating activities such as gambling and betting,” Walia said.
