Delta Corp shares tank 8% after GST Council retained 28% tax on casinos

Shares of Delta Corp tanked 8% to Rs 181.2 in Thursday's trade on BSE after the Goods and Services Tax (GST) Council on Wednesday retained the 28% tax on casinos, online gaming, and horse racing.

The tax is likely to be effective from October 1, 2023, and the Council will meet again to review the taxation after six months from the date of implementation

The Council, chaired by Sitharaman and comprising state ministers, in its last meeting on July 11 approved levying a 28% tax on the full face value of bets in online gaming, casinos and horse racing.

"It (28% GST on online gaming & casinos) is expected to be implemented from 1st October... It is also decided that this decision will be reviewed after six months after it is implemented. When I say six months it does not mean starting from today, it begins after when it is implemented," said the finance minister Nirmala Sitharaman.

 

The 28% GST announced by the Council will be applicable on the entry-level and not the winnings, clarified Sitharaman. She further added the Council will go ahead with its decision to levy the GST on face value.

"The Council’s decision to levy GST on deposits made at entry level has brought a sigh of relief for the sector. It has recommended parity in treatment for casinos and online games of skill. With the said amendment, the valuation mechanism for Casino and Online gaming are kept at par i.e., GST will be charged only on the value of coins purchased and money deposited in the wallet respectively, rather than levying GST on each game played. This is a welcome clarification for the industry stakeholders," said L. Badri Narayanan, Executive Partner, Lakshmikumaran & Sridharan Attorneys.

Subsequently, the Law Committee, comprising Centre and state tax officers, had prepared draft rules for consideration by the GST Council with regard to the computation of supply value for tax purposes.

With respect to casinos, the committee had proposed that the supply value should be the amount paid by a player for the purchase of tokens, chips, coins or tickets.

At 10.03 am, the scrip was trading 4.8% lower at Rs 187.6 on BSE. On a year-to-date basis, the stock has declined 13%, while it has plunged over 25% in the last one month.

In Q1 FY24, Delta Corp reported a net profit of Rs 67.9 crore, an 18.9% YoY rise compared to Rs 57 crore in Q1 FY23. Its revenue increased by 9% to Rs 272.8 crore in FY23 compared to Rs 250.3 crore in FY22. While the EBITDA was up 9.5% at Rs 95.8 crore.

Source::: THE ECONOMIC TIMES ,  dated 03/08/2023.