Mumbai: Sin tax could just cripple the racing horse

A draft of the upcoming GST suggests 40% tax for horse racing; experts say additional burden could be the last nail in the coffin

Turf club administrators across the country are losing sleep, and for good reason. If a recent viral WhatsApp document — purported to be the GST draft — is to be believed, horse racing could soon be grouped with tobacco, and therefore, may attract ‘sin tax’ at the rate of 40 per cent. This could be the final nail in the coffin for a sport that’s incurring heavy losses.

Horse racing in the city is already reeling under the various taxes and the ongoing cash crunch. File pic
Horse racing in the city is already reeling under the various taxes and the ongoing cash crunch. File pic

Though yet to be authenticated, the documents, which have been widely circulated in the racing fraternity, have started causing concern amongst racing bigwigs who fear that more tax could prove to be the death knell of horse racing in India.

Vivek Jain, chairman of the Royal Western India Turf Club (RWITC), currently in Dubai, acknowledged that he had heard about it, but not seen it yet. “I reserve comment until I see it, the draft pages,” he said on the phone, but did add, “If true, this would be very serious. I had written to my counterparts in other clubs that we need to be united to tackle this issue, but unfortunately, some of them feel it would be too premature to take it up at this stage.”

In what appears to be a 163-document going by the pagination mark at the top of each page, horse racing has been referred to on pages 11 and 12 under Item 17, which gives out the definition of “business”. Under clause 17 (h), the document mentions “services provided by a race club by way of totalisator or a licence to bookmaker in such club” [sic].

Clubs in soup
RWITC is already in deep trouble due to exorbitant betting tax (30 per cent) and huge operational losses. It was then followed by the cash crunch due to demonetisation that forced them to slash the stakes money by 50 per cent for the first four racing days. Now, if a sin tax at the rate of 40 per cent as prescribed in the GST is applied, it would be the straw that may break the camel’s or in this case, the horse’s back.

Rebranding fail
Meanwhile, if sin tax is imposed, it would also be a slap in the face of the race club, which for years now has marketed itself as a family centre or a weekend entertainment zone using terms like lifestyle sport for racing, instead of gambling. In fact, the g-word is anathema to racing officials who have been repackaging the racecourse, much to the chagrin of the punter, who is irked by what he says is, “the regular song ‘n’ dance in the paddock, which obstructs the serious study of horses.”

What is GST?
Goods and Services Tax is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the central and state governments. It would mean there is one tax rate for all.

About sin tax
Sin tax is a globally prevalent practice, under which products like alcohol and tobacco attract higher rates of tax. Typically, ‘sin tax’ is an excise tax that is levied on products and services considered to be bad for health or society such as alcohol, tobacco and gambling. These additional taxes are also seen as efforts to discourage people from the use of such products or services.

30%
Current rate of betting tax levied

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