28% GST is eminently justified, lower tax will incentivize ‘betting’: Karnataka Revenue Minister

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Krishna Byre Gowda, Karnataka revenue minister and member of the GST Council, said that the 28% GST rate on online gaming is “eminently justified”. In fact, he even went on to say that there should been a cess, too, on all types of “betting” but the Council did not discuss it.

Gowda said that the Group of Ministers (GoM) worked on their final report for over two years and the Council went along with their recommendations after deliberation and discussion on each point.

Gowda also revealed that there was an “overwhelming consensus” among all the members, adding that the states were, in fact, urging to levy the highest tax rate. He further said that the GST Council put online gaming in the same category as betting, believing it as the reason for the younger generation losing money in. He then asked that since sports also involve skill, should we also allow betting in them?

Gowda believes that cess should also be there on all forms of “betting” just like it is in case of luxury and sin goods, but the Council decided to stop at 28% GST only. He also believes that by talking about skill and chance, the online gaming supporters are “trying to hide that it is basically a betting activity”, so the Council decided not to differentiate and put them in a single category.

Speaking about global practices, Gowda said every nation has different ways in which it levies taxes and so India does not have to follow these countries. In India, there are already several challenges, for example horse racing is allowed in few states but not in others as it is undesirable. Should it be allowed everywhere?, questioned the revenue minister.

In Gowda’s opinion, 28% GST is justified. Several young people have already lost huge sums of money and are in debt after taking loans to pay the dues. Several cases of suicides have also surfaced in the last few years.

The online gaming companies argue that since it is a game of skill, it cannot be banned. “If the activity is to be permitted, then it is only reasonable that we levy higher tax rates, and this is not even the highest,” he said in an interview with The Economic Times.

On the argument of levying tax on gross gaming revenue (GGR) instead of on the full face value amount, the minister said that it will lower the rate to 5%-6%. “Do you mean activities like betting should be taxed at a lower rate than the essential food items in this country?” he asked.

The minister said as long as these games are legal, “the government will make sure they will have ease of doing business in Karnataka”. According to him companies arguing that the GST Council’s decision will kill the industry are just exerting “undesirable pressure” on the government.

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