The sport of horse racing got a body blow when the government spelled out the GST (Goods & Services Tax) details in Srinagar on Friday
The sport of horse racing got a body blow when the government spelled out the GST (Goods & Services Tax) details in Srinagar on Friday. Prescribing 28% GST on betting on horses, the highest among the four slabs--the others being 5, 12 & 18%--this decision by government put paid to all hopes that were raised after a Turf Authority of India (TAI) delegation had met finance minister Arun Jaitley in New Delhi recently.
But the government, it seems, thought it fit to "club" horse racing and race clubs with cinema halls under the 'entertainment' category. Interestingly, the breeding of thoroughbred horses for the purpose of racing has been classified under the 12% slab.
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"Killer tax": Jain
Vivek Jain, chairman of the Royal Western India Turf Club (RWITC) who had worked overtime to make a number of presentations to various tax authorities in the last five months, including a personal meeting with the finance minister, was extremely disappointed when mid-day asked for his reaction. "At 28 percent, it's a killer tax, no doubt about that," he said, "it will also greatly impact our indirect income from Bangalore and Mysore race clubs as their finances will also be impacted very negatively. Worse, there is a fear this level of tax may drive most of the betting into illegal channels, something that will benefit neither the race clubs, nor the government."
Jain, and his colleagues on the TAI, had done their homework and left no stone unturned in pleading their case with the government. "Just days ago we presented a paper on the all India weighted average rate of tax, which came to about 7.6% only," Jain explained, "hence as per the government’s stated policy that GST should not tax any industry more than its present levels, we expected a 12% tax slab at the maximum."
Wait & watch
Jain, however, hoped against hope, pointing out that there seemed to be some ambiguity as GST on lottery was not announced. It may be noted that horse racing has always been classified under the lotteries & gaming act, so Jain may well have a point there. "We have always tried to impress upon the government that we are a sport, and not 'gaming'," said the RWITC chairman, before striking a cautious note, "We have been advised to wait for the official schedule as well as the tax on lottery before deciding on our next steps which will be decided in a meeting of chairmen of all race clubs in the country scheduled for the next week."
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