Indian Horse Racing Reiterates Call for GST Change, Says Future of Industry in Jeopardy
India's horse racing body has repeated its request for reform of the Goods and Services Tax (GST) on horse racing, with the 28% levy on the face value of bets having a dire effect on the sport in the country.
The Turf Authorities of India (TAI), responsible for six racecourses in the country, has called for the GST to apply only to the commission or service fee of each bet wagered.
It argues that that in its current guise, the GST has made prize money unattractive for the sport and led to a rise in illegal betting, with knock-on effects for government revenue and the wider sport.
The TAI has pointed to a 50% drop in total turnover from the racing clubs, that in turn is causing issues for the whole industry. Horse breeders, trainers, jockeys, plus farmers and relevant suppliers are all affected.
Online and illegal bookmakers are flourishing in the country and are not bound by any taxes. V Harimohan Naidu, former Chairman of Bangalore Turf Club Ltd, said that: "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.
According to TAI figures published by The Hindu Business Line, the total taxes paid by the top three racetracks - Bangalore Turf Club, Hyderabad Race Club and Royal Calcutta Turf Club - to various State governments in 2016-17 (before the implementation of GST) were about Rs. 389 crores on a turnover of Rs. 3,482 crore.
Under the GST regime, taxes paid by the three clubs has dropped significantly to RS. 134 crores, Rs. 284 crores and Rs. 261 crores for 2018, 2019 and 2020, respectively.
TAI has repeatedly pointed out to the fact that the Supreme Court has declared horse racing as a "game of skill", not a "game of chance".
Horse racing was defined as neither gaming nor gambling in the two gambling-related acts (Police Act and Public Gaming Act), the apex court had ruled in 1996.
In September 2019, Zavaray Poonawalla of the Royal Western India Turf Club (RWITC) was positive about GST changes happening, but this is an issue that continues to drag on for the sport.
