Pitch for levy most straightforward on commission for wagering offerings
The Turf Authority of India (TAI), an organized association of six race clubs in India, has urged the Centre and States to remodel norms related with the applicability of Goods & Services (GST) on horse racing.
TAI has cautioned levying GST on a handiest fee,, or provider charge retained through a race membership and exclude prize cash of the winner. The association has additionally driven for a decrease price of GST — 18 in keeping with cent — because the Supreme Court has declared horse racing as ‘game of skill’ and no longer a ‘sport of hazard.’
“Horse racing is neither gaming nor gambling as described and envisaged beneath the two acts (Police Act and Gaming Act),” the apex court docket had stated manner back in 1996.
At present, GST is levied at the price of 28 percent on the the transactional value of making a bet — on the total,, wager value. During horse racing, many humans (better referred to as punters) location wager or ‘wagers.’ Race golf equipment act as the provider issuer for the wagering transaction. The bets are positioned thru totalisator, which is essentially a computerized device that swimming pools the wagers (after deduction of charges and statutory taxes) of numerous punters and additionally divides the overall wager amount to be disbursed to the winning punters.
To provide the service of facilitating wagering transactions, the race clubs get some fee, that is deducted and retained with the aid of the membership from the entire guess fee. The statutory tax this is to be levied is likewise deducted from the from the overall bet fee at this level. The remaining quantity is eventually fed into the totalisator and becomes a part of the wager pool for department and distribution among prevailing punters.
According to V Harimohan Naidu, Chairman and Senior Steward with Bangalore Turf Club Ltd, this is a the problem. GST is levied on the entire value, which includes the fee collected by race membership and as a result actual outgo for punters is a great deal less.
Illegal making a bet
“This promotes illegal betting which in turn outcomes in lesser revenue for the government and of course race club,” Naidu said even as including that it also affects horse breeding quarter and various allied activities.
He said that revenue for Bangalore Turf Club at some stage in pre-GST regime became over ₹1,900 crore which got here all the way down to nearly ₹850 crore immediately after the creation of GST. Similarly, Zavaray Poonawala, President, Poonawala organization, which operates stud firm near Pune, stated substantial impact of sales way loss for the entire breeding area. “If this example keeps, then technically speaking, 10,000 horses are to be positioned to sleep. Also, about 3 lakhs guy days will be misplaced,” he said. Beside, farm activities will also be affected.
According to GST rules, the price of delivery of actionable claim inside the shape of chance to win in having a bet, gambling or horse racing in a race club shall be 100 percent of the face value of the guess or the quantity paid into the totalisator. Entry 6 of Schedule III of CGST Act defines “Actionable claims, apart from lottery, making a bet and gambling” not as deliver of services. This meant the Act does now not levy any tax at the prize cash of horse racing.
The association has requested tax authority for a circular for rationalization as “the Act takes priority over regulations, notification or round there must no longer be any GST on the actionable claim (prize cash in horse racing) through treating horse racing as sport of talent and now not as betting or gambling.” Globally, there’s tax simplest on commission.