India's Goods and Services Tax Council (GST) has recently unveiled a new tax rate specifically aimed at online gambling, casinos, and horse race betting. This move signifies a significant development in the tax framework governing these activities within the country.
During the milestone 50th GST Council meeting, the decision was made to implement a flat 28% turnover tax on the total amount of bets placed. This marks a departure from the previous method of taxing revenue generated by gambling operators, highlighting a substantial change in the taxation approach.
The implementation date for the new tax rate has yet to be confirmed. However, it is important to note that amendments to existing legislation will be required to facilitate the smooth implementation of this tax measure.
Under the newly introduced tax system, the 28% turnover tax will be applied to the full face value of each bet made by consumers. This means that for every Rs100 (£0.93/€1.08/$1.22) spent by a bettor, the operator will be obligated to pay Rs28 in taxes.
The application of the turnover tax will differ based on the type of gambling activity. For online gambling in India, the tax will be levied on the full value of all bets placed with operators. In the case of land-based casinos, the tax will be applicable to the face value of chips purchased by customers at each venue. For horse racing, the tax will be applied to the full value of bets placed with bookmakers and totalisators.
This shift in tax rates comes in response to a comprehensive report submitted by a Group of Ministers (GOM) prior to the 50th GST Council meeting. The report examined various aspects of taxation related to gambling and presented two options for taxation: turnover or gross gaming revenue (GGR).
It is worth noting that this year has witnessed significant changes in India's online gambling market. In January, the Indian government introduced new regulations to regulate online gambling activities. These regulations emphasize that online games offered must not violate any existing laws, including state-wide gambling bans.
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