TAI hopes for relief in TDS after 28% GST blow

Turf Authorities of India’s hopes of coaxing the government into reducing the Goods and Service Tax (GST) levied on horse racing, took a major hit after finance minister Nirmala Sitharaman announced on Wednesday that racing will continue to cough up 28 per cent on full face value.

Explaining the taxability, the finance ministry said: “The said levy will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of racing.”

The statement added that suitable amendments will be made to the law to include online gaming and horse racing in Schedule III as taxable actionable claims.

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“We were confident that we could convince them because we have been in conversation with finance secretaries for some time now,” Bengaluru Turf Club chairman Shivkumar Kheny told DH.  “But this hits us hard. We have slotted a meeting with all the centres on Sunday to decide how we are going to tackle this issue. We will have many proposals and we will have all our lawyers too, and then we will decide if we should take the legal route or not.”

That it comes in the wake of TAI’s ‘fruitful’ meeting with the Group of Ministers (GoM) last month was especially disconcerting, says Kheny. The GoM was constituted to re-examine the issues related to GST.

Explaining the breakdown, Kheny detailed that on every Rs 100, 28 per cent will go to the government. Then, a further 30 per cent will be culled for TDS (Tax Deducted at Source), and then an additional 6 per cent will go as the commission to the club, leaving punters with marginal returns. Kheny feared this may force people to tale illegal route.

“... Meaning they will go to bookmakers because they get much better odds there,” said Kheny. “We can’t compete with those odds on a tote.”   

But the chairman revealed that he has a reason to believe that the clubs could get relief from the TDS. “Around 15 days ago, we met the secretaries in Delhi and asked them about how we can get over this issue,” said Kheny. “They looked very convinced and were very solution-oriented so let’s see what happens in the future.”

K Belliappa, a former BTC chairman, said that this move is disastrous for the racing community, stating the revenue drop from around Rs 2000 crore annually to a little over Rs 200 crores is å tough pill to swallow.

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“I think the government has negative feelings towards gambling,” he said. “They fail to understand that there is so much revenue to be generated in horse racing. It can be very beneficial to the government. Take Hong Kong for example, they make around Rs 150,000 crore.”

Pesi Shroff

Leading trainer

A move like this affects every single person involved in the industry, and this is not a small industry (estimated to employ approximately 3.4 million people pan India). See, jockeys and trainers who are professionals get around 7.5 per cent to 10 per cent of the prize money, and that money comes from the revenue stream. Because of this GST situation, the prize money naturally comes down, meaning jockeys and trainers also get much lesser. If this continues, the industry is going to bleed out. 

Hong Kong also faced this problem a while ago when their taxes were high, but then they dropped the tax to below ten per cent, and their revenues skyrocketed in no time. Use horse racing to make money!