The Kerala Governor Arif Mohammed Khan has signed an ordinance amending the state GST law on gambling, online gaming and horse racing. The ordinance was promulgated by the state government after the 50th Goods and Service Tax (GST) Council meeting had fixed 28 per cent GST on gambling at casinos, horse racing and online gaming and had also decided that the tax should be levied on the face value of the bet .
Background
In September 2023, the Union Finance Ministry had issued notifications for implementing 28% uniform GST on online money gaming, casinos and horse racing. The Union Government decision was based on a decision taken by the 50th GST Council to impose the 28% GST on full face value on online gaming, casinos and horse racing. This development necessitated the state governments also to follow suit with corresponding amendments to the state GST laws.
Objective
According to the Kerala Government, it also intends, through the amendment, to include provisions in the state GST Act to remove any absence of clarity regarding taxation provisions related to these online activities. The Kerala Government hopes to curb the menace of online gambling and gaming, which has been affecting many people, especially the youth, and causing social problems.
Reaction
The ordinance has been welcomed by some sections of the society, who see it as a step towards regulating and controlling the online gambling industry. However, some others have expressed concerns over the impact of the ordinance on the livelihoods of those involved in the sector, as well as the legal challenges that may arise from it.
Impact on Economy
The ordinance is expected to have a significant impact on the economy of Kerala, as it will affect the revenue generated from online gambling and gaming activities. According to some estimates, Kerala has one of the highest numbers of online gamblers in India, with around 10 lakh active users. The state government had earlier projected a revenue of Rs 100 crore from online rummy alone in 2023-24. However, with the new ordinance, this revenue may be reduced or lost altogether. On the other hand, some experts argue that the ordinance will have a positive effect on the economy, as it will prevent people from losing money on online gambling and gaming platforms, and encourage them to invest in more productive sectors.
Impact on Youth
The ordinance is also expected to have a positive impact on the youth of Kerala, who are among the most vulnerable groups to fall prey to online gambling and gaming addiction. According to a PIL filed in the Kerala High Court by a film director named Pauly Vadakkan, many individuals have been pushed to financial distress and some have even committed suicide after losing money on online gambling platforms. The petitioner had sought action against online websites promoting online rummy and other gambling activities, as well as celebrities who endorse them. The high court had lifted the ban imposed by the state government on online rummy, ruling it to be a game of skill and not of chance. However, with the new ordinance, such platforms may face legal hurdles and lose their customer base. This may help in reducing the social and psychological harm caused by online gambling and gaming addiction among the youth.