GST Council decides to impose 28% GST on full face value of horse racing bets

The GST Council, at its meeting held on July 11, 2023, decided to impose a GST of 28% on the full face value of the bets placed in horse racing¹. The Turf Authorities of India (TAI) said it was disappointed with that decision and asked the council to reconsider it¹.

TAI said horse racing is a sport recognized internationally, and even in India for over 200 years, and listed the effects it attributes to the tax¹. It said turnover had dropped from about ₹17,000 crore to approximately ₹6,400 crore in the post-GST period compared with the period before GST was introduced, and that returns to racing patrons had fallen by nearly 50% in the level of dividends¹. It also cited lower club revenues, the growth of gray betting channels, and risks to the agro-veterinary industry, which it said generates ₹300 crore per annum, and the breeding industry, worth about ₹500 crore per annum¹.

TAI said employment to about 2 lakh workers, both direct and indirect and mainly rural-based, is in danger, and that specialists such as trainers and jockeys cannot be absorbed elsewhere¹.

The same 28% rate on the full face value of bets was decided for online gaming at the 50th GST Council meeting, and the finance minister said the industry in question also included casinos and horse racing². Under the previous treatment, gross gaming revenue was liable to be taxed at 18%². The government said it would make suitable amendments to include online gaming and horse racing in Schedule-III of the Central Goods and Services Tax Act (2017), deeming them taxable actionable claims². A later account states that the 51st GST Council meeting imposed 28% GST on the full-face value of bets in July 2023 and that the new regime took effect in October 2023³.

What it means for players

The tax is charged on the full face value of a bet rather than on the operator's commission, so it applies to the whole amount staked, not just the platform's share². For a pari-mutuel pool, that changes the arithmetic between what is staked and what is returned as dividends, which is the measure TAI says has fallen by nearly 50%¹. The rate applies to bets placed in horse racing in India¹. How individual race clubs and totalisator operators pass the cost through to dividends and takeout has not been reported in these accounts.

What happens next

TAI has asked the GST Council to reconsider the decision¹. No response from the council to that plea has been reported. The government's stated plan to amend Schedule-III of the Central Goods and Services Tax Act (2017) to treat online gaming and horse racing as taxable actionable claims was reported at the time of the decision²; the outcome of that amendment process has not been reported here.

For how these duties are structured, see Betting Duty, GST and Franchise Tax on Horse Racing Bets and Betting on Horse Racing in India. For how operator taxes reach players, see Betting Duty, GST and Casino Tax: How Operator Taxes Reach Players, and for winnings, Tax on Horse Racing and Pari-Mutuel Winnings in Asia.