Those in the GST Council have done injustice to racing: Surender Reddy

May 19, 2017 10:37 pm | Updated 10:37 pm IST - CHENNAI

The proposed Goods and Services Tax (GST) on racing has evoked strong reactions from several leading race club managements in the country. The Hindu caught up with leaders of various clubs to get their views on racing being in the highest tax bracket of 28 per cent.

Surender Reddy, Chairman, Hyderabad Race Club: All I can say is that those sitting in the GST Council have done injustice to racing. The Supreme Court has clearly said racing is a game of skill, and is not gambling.

You cannot equate racing with lottery. Here we have trainers preparing expensive horses and jockeys riding them, there is a lot of skill involved.

How can any race club in India pay 28 per cent tax? We will have to retrench 50 per cent staff and ultimately have to shut shop. Every race club in India provides jobs to around 10,000 people.

R. Ramakrishnan, Chairman, Madras Race Club: The entire racing industry was looking forward to a reasonable GST, at either 14 or 18 per cent. It is, however, a shock to the industry that it has been fixed at 28 per cent, the maximum slab possible.

It is going to cause untold suffering in terms of hardship and employment of thousands of people dependent on racing in the country. Unless the GST council takes a pragmatic view and lowers the slab, the entire industry is doomed.

As far as the Madras Race Club is concerned, we are already paying 26.25 per cent as taxes. So the impact is likely to be minimal as compared to the other race centres such as Mysore and Bangalore which are paying only four and eight per cent respectively.

We, however, are looking forward to the final detail of what exactly the tax is going to be, whether on principal, on turnover, or the betting ticket. We also hope there would be no other cess or surcharges along with the taxes.

Vivek Jain, Chairman, Royal Western India Turf Club: As you are aware, we have been working on getting favourable terms for the racing industry for several months.

Turf Authorities of India (TAI) gave me the responsibility to lead the all-India delegation, and meetings were held with the Finance Minister as well as important bureaucrats in the GST Council. We also held meetings with the tax commissioners of all the major racing States and Finance Ministers of various racing States.

The bureaucrats were presented with several facts about the industry: 1. Racing is a sport, 2. It is not a lottery, 3. The weighted average all-India betting tax is 7.5 per cent so anything higher would be detrimental and not revenue neutral, 4. A higher tax will result in a flight to illegal bookmakers.

Our plea that the GST be charged on the earning (commission) and not face values does not seem to have found favour.

We have not got the official notification whether the 28 per cent is on betting or on the race club’s other income. We also have to examine the benefit of input tax credit paid by RWITC, though it is not expected to be significant. There is ambiguity on whether tax on betting has been notified or not, and if there will be a separate classification for totalisator betting.

A 28 per cent tax on betting, if final, will be disastrous for Mysore and Bangalore, but bad for the RWITC too.

The sport is going through bad times and this will come as a further setback. A chairman’s meeting has been called for next week to take stock of what the industry can do.

Hanumantha Prasad, Chairman, Mysore Race Club: We don’t know what exactly it is going to be... whether it will be on commission value or the ticket value. If it is on commission value, then the race clubs can manage 28 per cent. But if it is on ticket value, they will really suffer. Unlike a lottery, where there is a single winner, there are multiple winners in racing. Let’s say if horse No. 5 wins, there could be 5,000 or 10,000 people betting on that particular horse. Racing will be hit hard.

Yethiraj Jagannathan, Chairman, Bangalore Race Club: We don’t have any clarity yet. They have clubbed us together with cinema houses and luxury hotels. We have an entrance fee of Rs. 20 for the race club here, while a cinema house charges around Rs. 200 per ticket. I am still trying to find out the compete details.

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