Gambling and going to the movies will soon come with a hefty price tag in India.
Last week, the constitutional body tasked with overseeing the goods and services tax (GST) system announced four new tax slabs—5, 12, 18 and 28 percent—for a host of services under the new indirect tax regime that will be rolled out from July 1.
Gambling and race club betting have been grouped in the same tax bracket with other “luxury” services such as cinemas and five-star hotels, and as such, will attract a 28 percent tax. Entry fees in casinos or other entertainment events will also be charged the highest GST rate, but there is no proposal yet to impose additional tax on gambling and betting activities.
Union Finance Minister Arun Jaitley, who chairs the GST Council, said it’s only fair that cinema halls, casinos and betting centers are placed in the highest tax slab because entertainment and luxury taxes are already merged with service tax in GST.
Online skill games, which do not fall under gambling, will likely fall under the “all other services not specified elsewhere” category and will be subjected to an 18% GST. This rate is lower than gambling activities, but still slightly higher than the 15 percent service tax currently paid by online rummy, poker and fantasy sports operators in the country.
The GST Council has yet to announce the tax rate for lottery tickets or services provided by lottery distributors, although there have been reports that the government is considering putting the US$7.78-billion lottery business under the 28 percent tax bracket.
Meanwhile, race club operators in the country have decried the council’s decision to put racing in the highest tax bracket. In an interview with mid-day.com, Vivek Jain, chairman of the Royal Western India Turf Club (RWITC) described the 28% GST as a “killer tax” that may “drive most of the betting into illegal channels, something that will benefit neither the race clubs, nor the government.”