News

Horse-racing industry awaits GST rate change for survival

G Balachandar Chennai | Updated on May 18, 2020 Published on May 18, 2020

The Turf Authority of India (TAI), the apex body of six race clubs in the country, has reiterated its request to the 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. Today, 28 per cent GST is charged on the face value of the bets made and not on the commission. This eats into the total quantum of the prize money making it unattractive. This has also caused illegal betting market to flourish.

“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,” pointed out V Harimohan Naidu, former Chairman of Bangalore Turf Club Ltd.

Illegal betting

Over the years, illegal betting has risen sharply as illegal bookmakers, not bound by any taxes, offered better returns to punters; the revenue of the clubs began to fall and this is beginning to impact all stakeholders and families including farmers, unorganised workers and others dependent on this industry.

The impact has been severe. The total turnover of clubs has fallen by more than 50 per cent 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 — 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 ₹389 crore on a turnover ₹3,482 crore.

But, in the post-GST period, taxes paid by the three clubs dropped significantly 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),” the apex court had said in its ruling in 1996.

Published on May 18, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.