The Turf Authority of India (TAI), the apex body of six race clubs in the country, has requested to Centre for change in the applicability of Goods & Services Tax (GST) rate, on horse racing, as thousands of families dependent on the industry, directly and indirectly, face an existential threat to their livelihoods.
The association has requested levying GST on only the commission or service fee retained by a race club. Currently, 28% GST is charged on the face value of the bets made and not on the commission. This takes the total quantum of the prize money and makes it unattractive. This has also encouraged illegal betting.
Globally the tax is only on commission and not on the total bet value. The different tax structure in India for this industry has encouraged illegal betting leading to loss of revenue to the government as well.
Over the years, illegal betting has risen as illegal bookmakers, not bound by any taxes, offered better returns. Thr revenue of the clubs began to fall and this is the beginning to impact all stakeholders and families including farmers, unorganised workers and others dependent on this industry.
The total turnover of clubs has fallen by more than 50% in the post-GST regime, causing huge challenges to the entire value chain ; breeding industry, trainers, farmers who grow feeds and allied suppliers.
According to TAI, the total taxes paid by the top three clubs i.e. Bangalore Turf Club, Hyderabad Race Club and Royal Calcutta Turf Club, to various State governments in 2016-17 ( which before the implementation of GST ) were about ₹389 crore on a turnover ₹3,482 crore.But, in the post-GST period, taxes paid by the 3 clubs dropped to ₹134 crore, ₹284 crore and ₹261 crore for FY18, FY19 and FY20 respectively.
TAI has repeatedly pointed out to the fact that the Supreme Court has declared horse racing as a “Game of Skill and not a “Game of Chance.” Horse racing is neither gaming nor gambling as defined and envisaged under the two Acts (Police Act and Gaming Act).