Horse racing falls under the ambit of betting and gambling, which attracts a higher rate of GST. The taxation of horse racing involves multiple aspects, including entry fees, betting amounts, and commission earned by bookmakers or totalizators.
Value of supply in case of Betting, Horse racing etc
Before understanding the applicable GST rates on betting, horse racing etc. First of all, let us understand the value of the supply. The value of supply in the case of betting, horse racing etc. is to be determined as per rule 31A of the Central Goods and Service Tax Rules, 2017. Sub-rule (3) of rule 31A states that the value of supply in case of betting, horse racing etc. shall be 100% of the face value of the bet or the amount paid into the totalisator. It should be noted here that totalisator is a device which shows the number and the amount of bets staked, to facilitate the division of total among those backing the winner.
GST Rates on Betting Services
As per entry no. 34 of notification no. 11/2017 Central Tax (Rate) dated 28th June 2017, clearly states that the GST on betting would be 14%. Thus, GST rates in case of betting services would be as under
| Type of Supply | GST rates |
| Intra-state supply (within the state supply) | CGST–14% SGST / UTGST– 4% Total GST rate–28% |
| Inter-State supply (outside the state supply) | IGST–28% |
Legal Perspective
- The Supreme Court has ruled that horse racing is a game of skill and not purely gambling, but for tax purposes, betting on horse racing is still considered under betting and gambling.
- GST is levied on the full face value of bets, not just the commission or margin earned by the race club.
Impact of GST on Horse Racing Industry
- Higher tax burden on bettors: Since GST is applied on the full bet amount, it increases the cost for bettors.
- Revenue for the Government: The 28% tax rate helps in revenue generation but has been criticized for discouraging legal betting.
- Race Clubs’ Compliance Requirements: Clubs must ensure GST collection and filing under the correct tax head.