The Goods and Services Tax Council has referred the matter of horse racing and how it must be taxed to a Group of Ministers, even though the Fitment Committee had made its recommendations clear to the Council, said persons aware of the development .
The Fitment Committee had, in its meeting on September 7, recommended the GST on horse-racing should be payable only on commissions and not include the prize money.
“The States of Tamil Nadu, West Bengal, and Karnataka raised the issue at the Fitment Committee meeting and said that the fact that prize money was currently being taxed under GST was leading to much more illegal betting,” the persons said. “Karnataka recommended that only the commission should be taxed, in line with international standards, which the Fitment Committee agreed to.”
The GST Council’s meeting on Friday, however, was mostly spent deliberating rate changes on a variety of products, and so was running short of time by the time the agenda item of horse racing came up. Due to paucity of time, only two Ministers were able to speak on the issue.
“West Bengal’s Finance Minister Amit Mitra made the point that lotteries and casinos were different from horse racing,” the persons added.
“The Telangana Minister also spoke on the issue.”
Game of skill
The horse racing community has repeatedly made representations to the Finance Ministry saying that horse racing was a game of skill while lotteries and casinos were games of chance, and so the two should be taxed differently.
The GST Council, however, decided to refer both horse racing and lotteries/casinos to the GoM, and Union Finance Minister Nirmala Sitharaman instructed the GoM to come back to the Council with its recommendations as soon as possible.
