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The <keyword id="19994390" type="General" weightage="100" keywordseo="GST-Council" source="keywords">GST Council</keyword> on Monday is expected to deliberate on a host of issues, including <keyword id="20118944" type="General" weightage="20" keywordseo="taxation" source="keywords">taxation</keyword> of insurance premiums, GoM's suggestions on rate rationalisation, and a status report on <keyword id="19939772" type="General" weightage="20" keywordseo="online-gaming" source="keywords">online gaming</keyword>, sources said. Sources said the fitment committee, comprising Centre and state tax officials, will present a report on GST levied on life, health and reinsurance premiums and the revenue implications. The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, will decide on whether to reduce the tax burden on <keyword id="19894985" type="General" weightage="20" keywordseo="health-insurance" source="keywords">health insurance</keyword> from the current 18% or exempt certain categories of individuals, like senior citizens. The deliberations will also happen with regard to the goods and services tax (GST) cut on <keyword id="23083492" type="General" weightage="20" keywordseo="life-insurance-premium" source="keywords">life insurance premium</keyword>. In 2023-24, the Centre and states collected Rs 8,262.94 crore through GST on health <keyword id="22612491" type="General" weightage="20" keywordseo="insurance-premium" source="keywords">insurance premium</keyword>, while Rs 1,484.36 crore was collected on account of GST on health reinsurance premium. The issue of taxation on insurance premium figured in Parliament discussions with opposition members demanding that health and life insurance premiums be exempt from GST. Even Transport Minister Nitin Gadkari wrote to Sitharaman on the issue. Finance Minister Nirmala Sitharaman in her reply to discussion on the Finance Bill had said 75% of the GST collected goes to states and opposition members should ask their state finance ministers to bring the proposal at the GST Council. West Bengal Finance Minister Chandrima Bhattacharya had raised the issue in the meeting of the Group of Ministers (GoM) on rate rationalisation last month and the matter was referred to the fitment committee for further data analysis. The GoM had opined against any tinkering of four-tier GST slab of 5, 12, 18, and 28 % for the time being. The panel, however, had asked the fitment committee to look into any scope for rationalisation of rates of goods and services. With regard to online gaming, Centre and state tax officers will present a "status report" before the GST Council. The report would include <keyword id="20053837" type="General" weightage="20" keywordseo="GST-revenue" source="keywords">GST revenue</keyword> collection from the online gaming sector before and after October 1, 2023. From October 1, 2023, entry-level bets placed on online gaming platforms and casinos were subject to 28% GST. Prior to that, many online gaming companies were not paying 28% GST, arguing that there were differential tax rates for games of skill and games of chance. The GST Council in its meeting in August 2023 had clarified that online gaming platforms were required to pay 28% tax and subsequently, Central GST law was amended to make the taxation provision clear. Offshore gaming platforms were also mandated to register with GST authorities and pay taxes, failing which the government would block those sites. The council had then decided that the taxation on online gaming sector would be reviewed after six months of its implementation. Sources said the Council would deliberate on the status of taxation on the sector, and any change in tax rates is unlikely. Besides, the Council is likely to be apprised about the ongoing drive against fake registration, the success of the drive and action taken against such entities. The total amount of suspected GST evasion would also be presented before the Council. The drive, from August 16, 2024, to October 15, 2024, is aimed at detecting suspicious/fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers. In the first drive between May 16, 2023 to July 15, 2023, against fake registration, 21,791 entities (11,392 pertaining to state tax jurisdiction and 10,399 pertaining to CBIC jurisdiction) having GST registration were discovered to be non-existent. An amount of Rs 24,010 crore (state - Rs 8,805 crore + centre - Rs 15,205 crore) of suspected tax evasion was detected during the special drive. Also, the Council would approve notifications, including that of the amnesty scheme, announced in the last council meeting. The council in June meeting took a host of taxpayer-friendly measures, including waiver of interest and penalty for demand notices issued in the first three years of GST -- 2017-18, 2018-19 and 2019-20 -- if the full tax demanded is paid by March 31, 2025. To reduce litigation, a monetary limit for tax officers, to file appeals before the GST Appellate Tribunal, the High Court and the Supreme Court was fixed at Rs 20 lakh, Rs 1 crore and Rs 2 crore, respectively, by the Council. It also recommended a reduction of the quantum of pre-deposit required to be paid by taxpayers for filing of appeals under goods and services tax (GST).

GST Council to deliberate on taxation of insurance premium, report on online gaming tomorrow

New Delhi, The central government on Friday will seek the introduction and passage of the Central Goods and Services Tax (Amendment) Bill, 2023 and <keyword id="4742340" type="General" weightage="80" keywordseo="integrated-goods-and-services-tax" source="Orion">Integrated Goods and Services Tax</keyword> (Amendment) Bill, 2023 in the Lok Sabha. The union cabinet earlier this week had cleared the two bills. The amendment in the <keyword id="4797043" type="General" weightage="80" keywordseo="central-goods-and-services-tax-act" source="Orion">Central Goods and Services Tax Act</keyword> will allow introduction of a 28 per cent goods and services tax rate on horse racing, online gaming and casinos. Similarly, states too will have to amend their individual GST legislations separately. If the bill is passed in the day, the new tax system will become applicable from October 1, as was decided in the <keyword id="6355040" type="General" weightage="80" keywordseo="gst-council" source="Orion">GST council</keyword> meeting held earlier this month. It was decided in that meeting that 28 per cent levy on online gaming, casinos and horse racing will become applicable from October 1 onwards and will be reviewed for six months, and if need arises, changes could bemade in the tax structure after that. Friday being the last day of the monsoon session of Parliament, <keyword id="25455" type="General" weightage="80" keywordseo="finance" source="Orion">Finance</keyword> Minister <keyword id="129243" type="General" weightage="80" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> will introduce the two bills and if the House business continues, then it will also seek to get the two bills passed. Considering the fact that the GST council had to meet twice within a month owing to continuous representations from the gaming industry, seeking to ease the 28 per cent tax slab on gaming, the bills are likely to be pushed for passing as the applicability of the new tax slab is October 1. --IANSans/dpb

Centre seeks to amend GST Act to levy 28% tax on online gaming, casinos

New Delhi, Finance minister Nirmala Sitharaman on Tuesday said the 28 per cent GST on full face value of supplies in casinos, race courses and online gaming will result in higher revenues. The online gaming segment grew by 28 per cent in 2021 to reach USD 1.9 billion, as per NITI Aayog estimates referred in the Draft National Policy for Growth of Animation, Visual Effects, Gaming, Comic &amp; Extended Reality sector in India prepared by the Information and Broadcasting Ministry. In a written reply to a question in the Rajya Sabha, Sitharaman said casinos are currently paying 28 per cent GST on Gross Gaming Revenue (GGR). Online gaming industry supplying actionable claims and some horse race clubs are currently paying GST at the rate of 18 per cent on platform fees/commission ranging from 5 to 20 per cent of the full face value, while some horse race clubs are paying 28 per cent on the full face value. Sitharaman said online gaming companies supplying actionable claims and some horse race clubs paying 18 per cent on platform fee/commission are disputing the 28 per cent levy on actionable claims in the form of betting and gambling before various legal fora. "It is anticipated that the levy of 28 per cent on full face value, as recommended in the 50th <keyword id="6355040" type="General" weightage="50" keywordseo="gst-council" source="Orion">GST Council</keyword> meeting, will result in increase of revenue from current levels," Sitharaman added.

28% GST on face value in casinos, online gaming, horse racing will increase revenue collection: FM

The panel of state finance ministers is likely to recommend a uniform <keyword id="6354679" type="General" weightage="100" keywordseo="gst" source="Orion">GST</keyword> levy of 28 per cent on <keyword id="6422069" type="General" weightage="20" keywordseo="Online-gaming" source="Orion">online gaming</keyword> irrespective of whether it is a game of skill or game of chance, sources said. However, it is likely to suggest a revised formula for calculating the amount on which the Goods and Services Tax (GST) would be levied. Currently, online gaming attracts 18 per cent GST. The tax is levied on gross gaming revenue, which is the fees charged by online gaming portals. Sources said that the GoM report is almost final and would be submitted to the GST Council soon for consideration. The Group of Ministers (GoM), chaired by <keyword id="6355772" type="General" weightage="50" keywordseo="meghalaya" source="Orion">Meghalaya</keyword> Chief Minister Conrad Sangma, had in its earlier report submitted to the Council in June suggested a 28 per cent GST on on the full value of the consideration, including contest entry fee, paid by the player, without making a distinction such as games of skill or chance. However, the Council had asked the GoM to reconsider its report. Following that the GoM took the views of the Attorney General and also met stakeholders from the online gaming industry. Although the GoM deliberated on separate definitions for 'games of skill' and 'games of chance', it finally decided to tax both as demerit goods attracting a 28 per cent GST. The message has to be clear that online gaming is a demerit good. However, some relaxation in valuation methods could be provided, sources told PTI. The GoM report in June had suggested that the GST should be levied on the entire amount received as consideration from the participant. Charging 28 per cent GST on the entire amount, which a player deposits for a game for both categories of online game, would reduce the prize money left for distribution and drive away players from legitimate tax deducting portals. This may also encourage online gamers towards unlawful portals that do not deduct tax, sector experts had said. Online gaming witnessed a spurt during the time of Covid lockdown with the number of users in India rising substantially. As per a KPMG report, the online gaming sector would grow to Rs 29,000 crore by 2024-25 from Rs 13,600 crore in 2021. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/indian-markets-open-mixed-tracking-global-cues-reliance-industries-kaynes-technology-ndtv-nykaa-among-stocks-to-watch-out-for/articleshow/95674551.cms">Indian markets open mixed tracking global cues – Reliance Industries, Kaynes Technology, NDTV, Nykaa among stocks to watch out for</a> <a href="https://www.businessinsider.in/stock-market/news/kaynes-technology-debuts-at-32-premium-on-exchanges-tops-grey-market-expectations/articleshow/95675099.cms">Kaynes Technology debuts at 32% premium on exchanges, tops grey market expectations</a> <a href="https://www.businessinsider.in/india/news/government-issues-guidelines-to-guard-against-fake-reviews-of-products/articleshow/95676593.cms">Government issues guidelines to guard against fake reviews of products</a>

Ministers' panel may recommend 28% GST on online gaming with a revised calculation formula

<ul><li>Decriminalisation of offences under the GST law, setting up appellate tribunals and mechanism to curb tax evasion in pan masala, gutkha businesses among the issues to be discussed.</li><li>Besides, GST on online gaming and casinos may come up for deliberations at the Council meeting.</li><li>With regard to taxation of online gaming, casinos and horse racing, the GoM, in its last meeting in November, had agreed on a 28 per cent GST on these segments.</li></ul> Decriminalisation of offences under the GST law, setting up appellate tribunals and mechanism to curb tax evasion in pan masala and gutkha businesses are among the issues slated to be discussed in the <keyword id="3680839" type="General" weightage="20" keywordseo="gst-council-meeting" source="Orion">GST Council meeting</keyword> which began on Saturday morning. Besides, GST on online gaming and casinos may come up for deliberations at the Council meeting. The Group of Ministers (GoM), chaired by Meghalaya Chief Minister Conrad Sangma, set up last year on the issue had submitted its report to Finance Minister Nirmala Sitharaman on Thursday. The Council would also consider a report of tax officers and give clarity on the rate applicability in certain goods and services. "Union Finance Minister Smt. @nsitharaman chairs the 48th meeting of the GST Council via virtual mode, in New Delhi, today," the finance ministry tweeted. With regard to decriminalisation of offences, the law committee of the GST Council, comprising tax officers from the Centre and states, has suggested to the Council to increase the monetary threshold for launching prosecution for GST offences. The law committee has also suggested that the fee payable by taxpayer for compounding of GST offences be lowered to 25 per cent of the tax amount, from up to 150 per cent currently, with a view to improving ease of doing business. It has suggested raising the threshold of launching prosecution to Rs 20 crore, from Rs 5 crore at present. Launching of prosecution by taxmen means commencement of legal proceedings against the offender. The report of the GoM on tax evasion by pan masala and gutkha companies is likely to be taken up for discussion in the Council, sources said. With regard to setting up of Goods and Services Tax Appellate Tribunals (GSTATs), the GoM has suggested that the tribunals should consist of two judicial members, and one technical member each from the Centre and states, besides a retired Supreme Court judge as President, sources said. The GoM on GSTATs was set up in July under the chairmanship of Haryana Deputy Chief Minister Dushyant Chautala. With regard to taxation of online gaming, casinos and horse racing, the GoM, in its last meeting in November, had agreed on a 28 per cent GST on these segments. However, in absence of consensus on whether the tax should be levied on only the fees charged by the portal or the entire consideration, including the bet amount, received from participants, the GoM had decided to refer all suggestions to the GST Council for a final decision. Currently, online gaming attracts 18 per cent GST. The tax is levied on gross gaming revenue, which is the fees charged by online gaming portals. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/how-indians-have-spent-their-money-on-swiggy-in-2022/slidelist/96285686.cms">Spending ₹75,000 on an order to buying groceries worth ₹16.6 lakh, here’s how Indians used Swiggy in 2022</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/upcoming-electric-scooters-in-india-in-2023/articleshow/96278794.cms">From Suzuki and TVS to Hero Electric: Here are some of the top electric scooters expected to launch in 2023</a>

GST Council meet: decriminalisation, tax evasion in pan masala, gutkha biz on agenda

<ul><li>The Indian government is reportedly all set to increase <keyword id="6354679" type="General" weightage="80" keywordseo="gst" source="Orion">GST</keyword> on online gaming to 28%, a proposal that could spell trouble for the industry and players alike. </li><li>The online gaming industry is expected to cross $5 billion valuation by 2025, but the taxman’s greed could kill the golden-egg laying hen. </li><li>Experts are worried about the impact this could have on the industry – both the players and the businesses, which are still in their early days. </li></ul>The Indian government is reportedly all set to tax casinos, online gaming and horse racing at the highest slab of GST – 28%. Looks like the taxman is intent on treating these recreational activities and skills on par with tobacco, cigarettes, <a href="https://www.businessinsider.in/cryptocurrency/news/28-gst-on-crypto-transactions-india-is-reportedly-mulling-another-tax-levy-next-week/articleshow/92407767.cms">cryptocurrencies</a> and luxury cars. Online betting, gambling, casinos and horse racing have long been treated ‘unfairly’ by the Indian taxman – while GST has been considerably moderate at 18% until now. Winnings and other income earned from these activities have been taxed at the highest rate of 30% without any deductions whatsoever. Now, a new <a href="https://economictimes.indiatimes.com/news/economy/policy/28-gst-likely-on-casinos-online-gaming-horse-races-on-gross-revenue/articleshow/92474293.cms?from=mdr">report</a> suggests that the government is mulling increasing the GST rate to 28% – the highest in effect currently. This will be applicable on compulsory food and beverages as well, driving up the costs for businesses and participants. <div type="Article" hostid="261" msid="92356710" title="INTERVIEW: The big picture on 5G, Big Tech-telco war with COAI’s Dr SP Kochhar" mstype="2" mssubtype="0"></div> <cmsannotation type="cmsannotation" annotationid="Fantasies are taxed too, and that too doubly" comment="subhead" text="Fantasies are taxed too, and that too doubly">Fantasies are taxed too, and that too doubly</cmsannotation> The government proposal says that GST will be charged on the gross revenue, not the net value added, which goes against both global tax ethics – as well as the very foundation of the GST regime, which intends to remove the undesirable double taxation effect. "Taxing online gaming, horse racing, and casinos at gross revenue instead of net value addition would be a departure from the global tax ethics," Rajat Mohan, senior partner, AMRG &amp; Associates told PTI. This could have an adverse impact on the entire industry. For instance, the online gaming sector which includes the likes of MPL, Zupee, Winzo and other startups, is expected to cross $5 billion in valuation by 2025, according to a <a href="https://www.ibef.org/blogs/india-s-nascent-gaming-industry-on-the-rise">IBEF report</a>. The government earned nearly ₹1,500 crore from fantasy sports in the form of taxes in FY21. A Deloitte report says that the combined industry contribution could cross a whopping ₹16,000 crore cumulatively over the next two years. And the taxman believes that he found a goose which lays golden eggs. <cmsannotation type="cmsannotation" annotationid="The costly game of confusion" comment="subhead" text="The costly game of confusion">The costly game of confusion</cmsannotation> The online gaming industry has been plagued by the ambiguous nature of government’s tax policies. The taxman has often been said to be confused about the nature of online games – whether those involve skills or are just gambling. It might be justified to tax gambling at the highest rate of tax, but experts believe that punishing games of skill in the same manner is unfair. To make matters worse, the government wants to raise the tax from 18% to 28%. <cmsannotation type="cmsannotation" annotationid="Mukesh Ambani, Rakesh Jhunjhunwala and more, to be affected" comment="subhead" text="Mukesh Ambani, Rakesh Jhunjhunwala and more, to be affected">Mukesh Ambani, <keyword id="6398943" type="General" weightage="80" keywordseo="rakesh-jhunjhunwala" source="Orion">Rakesh Jhunjhunwala</keyword> and more, to be affected</cmsannotation> This can also have an adverse impact on telcos, which are banking on online gaming as a new revenue stream as the industry seems to be entering a phase of stagnation. “Rather than being just the pipe, telcos like Jio (RIL owned) and Bharti are focusing on gaming as an incremental source of ad/subscription revenue. In fact, RIL believes that gaming in India will be bigger than music, movies and television shows put together,” said a report by Bank of America Securities. This could also impact <keyword id="201442" type="General" weightage="50" keywordseo="delta-corp" source="Orion">Delta Corp</keyword>, the only listed casino operator in the country which has seen its fortunes fade away, with even Rakesh Jhunjhunwala paring down his holdings in the company considerably. <div type="javascript" title="Custom" contenttype=""><cdata><![CDATA[]]></cdata></div> “This would be a distress the business model to a great extent as the touted super tax will have to be funded either by the platform, who do not make that kind of money in this business or would go on to reduce the prize pool size – effectively bringing down the interest in customer engagement,” Adarsh Somani, senior partner at ELP Law, told Business Insider India. This would wreak havoc on the gaming industry, and even if the government wants to reduce difficulties by offering a single – but higher – rate of tax, the valuation methodology will have to be made clear, Somani added. As things stand today, there is plenty of ambiguity that will have to be worked out by the government – even a small misstep could spell a lot of trouble for the gaming industry and its participants. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/auto-and-finance-stocks-can-bounce-back-even-if-the-market-crashes-in-july/articleshow/92436186.cms">Auto and finance stocks can bounce back even if the market crashes in July</a> <a href="https://www.businessinsider.in/finance/news/rbi-kept-the-rupee-exceptionally-stable-so-far-and-the-tide-could-turn-for-the-better-say-experts/articleshow/92414356.cms">RBI kept the rupee ‘exceptionally’ stable so far, and the tide could turn for the better say experts</a> <a href="https://www.businessinsider.in/business/telecom/news/interview-the-big-picture-on-5g-big-tech-telco-war-with-coais-dr-sp-kochhar/articleshow/92356710.cms">INTERVIEW: The big picture on 5G, Big Tech-telco war with COAI’s Dr SP Kochhar</a>

India is betting on casinos, online games and horse races to fill its coffers

<ul><li>The <keyword id="6354679" type="General" weightage="20" keywordseo="gst" source="Orion">GST</keyword> Council has levied a 28% rate to casiones, <keyword id="149956" type="General" weightage="20" keywordseo="horse-racing" source="Orion">horse racing</keyword>, etc on the amount the gaming company earns from its users. </li><li>The GST Council has recommended removing the critical distinction between game of skill and <keyword id="10751675" type="General" weightage="20" keywordseo="game-of-chance" source="Orion">game of chance</keyword>. </li><li>The decision is expected to hit the <keyword id="6422069" type="General" weightage="20" keywordseo="online-gaming" source="Orion">online gaming</keyword> industry hard and the shares of listed players has taken a nosedive. </li></ul>The online gaming industry woke up expecting a bad day on Dalal Street after the 50th GST Council announced its decision to levy a 28% GST on online gaming, along with horse racing and <keyword id="71409" type="General" weightage="20" keywordseo="casinos" source="Orion">casinos</keyword>. As expected, shares of listed players like Nazara Tech and Delta Corp took a major hit with the latter nosediving 20%. The online gaming industry stakeholders have termed the 28% GST on the full value of gaming as "irrational and egregious", saying that the move is a self goal that will kill the skilled online gaming sector in the country. <cmsannotation type="cmsannotation" annotationid="But first, what is the dispute" comment="subhead" text="But first, what is the dispute">But first, what is the dispute</cmsannotation> The main debate has been about online gaming categorisation, whether it is a game of skill or a game of chance. “The Government is saying that if it is a game of chance, it will come under the category of betting, gambling, so there will be a GST of 28% on the gross value. The industry is saying that it is a game of skill and should be liable to18% GST, not on the gross value, but only on the commission component,” explains Pratik Jain, Partner, PwC India, a professional services firm. Roland Landers, CEO of the All India Gaming Federation, said that the decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities. "We believe this decision by the GST Council is unconstitutional, irrational, and egregious. This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms," reads his statement. <cmsannotation type="cmsannotation" annotationid="The impact on the online gaming industry" comment="subhead" text="The impact on the online gaming industry">The impact on the online gaming industry</cmsannotation> Experts and gaming company owners agree that this is going to adversely impact the gaming industry in a major way. “It will be interesting to see the business impact for the online gaming sector considering that this sector has been touted to have significant growth potential,” says Shilpy Chaturvedi, Partner, Deloitte India, a professional services firm. Joy Bhattacharjya, Director-General, Federation of Indian <keyword id="34077" type="General" weightage="20" keywordseo="fantasy" source="Orion">Fantasy</keyword> Sports (FIFS), says that as pointed out by FIFS and many of its members on numerous occasions, change in valuation to tax on the total consideration will cause irreversible damage to the industry, loss of revenue to the exchequer and loss of employment for lakhs of skilled engineers. “The decision will have a chilling effect on the $2.5 billion of FDI already invested by investors and jeopardise potentially any further FDI in the sector. Further, this decision will shift users to illegal betting platforms leading to user risk and loss of revenue for the government,” says Bhattacharjya. Experts say that the higher tax burden will also put a blocker on India’s expanding gaming industry, and deter the new player from entering the industry. Industry insider, Mitesh Gangar, the co- founder and director of PlayerzPot, a fantasy gaming company, says that the move will corner the gaming industry in a big way. “The overall operations will not be feasible. The high tax burden will completely restrict the cash flow, limiting a company’s ability to invest in research, innovation, expansion or survival,” he said. The government on its part has said that the move isn’t targeting any particular industry. Finance Minister Nirmala Sitharaman said, “The decisions were intensive and were taken after consultation with all the members, including those representing states like Goa and Sikkim where casinos form a key part of the tourism sector."

Online gaming industry says 28% GST makes operations unfeasible

<ul><li>About 60% of citizens want the GST rate on cryptocurrencies to be 28% or higher.</li><li>Eight in ten Indians are in favour of imposing 28% or higher GST on online games, casinos and horse racing.</li><li>8 in 10 Indians want 28% of higher GST on casinos, online games and horse races</li></ul>Six in ten Indians are in favour of keeping cryptocurrencies under the 28% or higher goods and services tax (GST) bracket, according to a report by community social media platform LocalCircles. Meanwhile, eight in ten Indians are also in favour of imposing a similar GST slab on online games, casinos and horse racing. The survey — which was based on 34,000 responses from citizens residing in 319 districts — revealed that 34% citizens were for the aforementioned GST slab on cryptocurrencies. Meanwhile, 7% of the responders voted for “40%” tax slab, 19% voted for over “50%” tax slab. About 22% did not have an opinion on it. On an aggregate basis, 60% of citizens want the GST rate on cryptocurrencies to be 28% or higher. This question received 12,330 responses. According to a <a href="https://www.news18.com/news/business/tax/gst-council-to-consider-levying-28-tax-on-bitcoin-other-cryptocurrencies-know-more-5137639.html">report </a>by CNBC TV 18, the GST Council will take up a proposal to impose<a href="https://www.businessinsider.in/cryptocurrency/news/crypto-tax-in-india-government-may-levy-28-percent-gst/articleshow/91439216.cms"> 28% GST</a> on all services related to cryptocurrency. The government’s view is to keep cryptocurrency at par with lotteries, casinos, racecourses and betting, the report had noted. The development comes only a few months after the finance minister Nirmala Sitharaman imposed a <a href="https://www.businessinsider.in/investment/news/crypto-tax-in-india-kicks-in-from-april-heres-all-you-need-to-know/articleshow/90344479.cms">30% tax on the gains on cryptocurrencies</a>, along with 1% tax deducted at source (TDS). <cmsannotation type="cmsannotation" annotationid="Taxation on online games, casino and horse racing" comment="subhead" text="Taxation on online games, casino and horse racing">Taxation on online games, casino and horse racing</cmsannotation> On the taxation on online games, casinos and horse racing, 45% citizens were in favour of 28% GST on this leisure activity. Meanwhile, 7% of the responders voted for a 40% tax slab, 27% voted for over 50%. Only one percent of the respondents believed that online gaming, casino and horse racing should be exempted from GST, while six percent did not have an opinion on it. This question in the survey received 12,097 responses. Overall, 79% of the respondents wanted 28% or higher GST on these activities. In May, a Group of Ministers (GoM) <a href="https://economictimes.indiatimes.com/news/economy/policy/group-of-ministers-agree-to-levy-28-gst-on-casino-race-course-and-online-gaming/articleshow/91638515.cms?from=mdr">agreed</a> to recommend hiking the GST on casinos, race courses and online gaming services to 28%. Currently, the GST rate applicable on online games involving betting or gambling is 28% and for the ones without betting or gambling, it is 18%. On horse racing, GST is levied at 28% on the total bet value. SEE ALSO <a class="tout-title-link" href="https://www.businessinsider.in/business/startups/news/tough-times-will-make-startups-go-for-hero-teams-slash-ad-budgets-and-focus-on-profits/articleshow/92270583.cms" style="">Tough times will make startups go for ‘hero teams’, slash ad budgets and focus on profits</a> <a href="https://www.businessinsider.in/india/news/spicejet-hiked-its-ticket-prices-indigo-and-others-might-follow-suit/articleshow/92251751.cms" style="">SpiceJet hiked its ticket prices; Indigo and others might follow suit</a> <a href="https://www.businessinsider.in/business/news/ready-to-take-off-rakesh-jhunjhunwalas-akasa-air-receives-its-first-boeing-aircraft/articleshow/92247189.cms" style="">Ready to take off – Rakesh Jhunjhunwala's Akasa Air receives its first Boeing aircraft</a>

8 in 10 Indians want 28% or higher GST on casinos, online games and horse races

Chandigarh, Jun 29 (PTI) The <keyword id="6354679" type="General" weightage="20" keywordseo="gst" source="Orion">GST</keyword> Council on Wednesday deferred decision on levying a 28 per cent tax on casinos, online gaming, horse racing and lottery pending more consultations with stakeholders, Union Finance Minister Nirmala Sitharaman said. A group of ministers headed by Meghalaya Chief Minister Conrad Sangma has been asked to consider submissions of stakeholders again on the valuation mechanism and submit its report by July 15, she told reporters here. The council will meet again in the first week of August to decide on the issue, she said. A two-day meeting of the panel considered a report of the GoM but deferred a decision as Goa and some others wanted to make more submissions. The GoM had recommended that online gaming should be taxed at the full value of the consideration, including the contest entry fee paid by the player on participating in the game. In cases of race courses, it had suggested that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers. It also recommended that no distinction should be made on grounds of game of skill or game of chance for the purpose of the levy of GST and should be taxed at the highest rate of 28 per cent. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/startups/news/zepto-dunzo-among-the-next-122-unicorns-from-india-heres-the-complete-hurun-list/articleshow/92545281.cms">Zepto, Dunzo among the next 122 unicorns from India — here's the complete Hurun list</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rupee-could-slide-to-82-as-a-strong-dollar-is-nullifying-rbi-efforts/articleshow/92543254.cms">Rupee could slide to 82 as a strengthening dollar is nullifying RBI efforts</a>

GST on casinos, lotteries, horse races deferred as Nirmala Sitharaman reconsiders

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Hello! You could win a prize worth up to $480,000 during the Super Bowl. (I'm not talking about that 10-leg same-game parlay you're banking on.) DoorDash is giving someone <a target="_blank" href="https://www.businessinsider.com/doordash-super-bowl-ads-every-item-sweepstakes-2024-1">everything being advertised during this year's Super Bowl</a>.In today's big story, we're looking at the <a target="_blank" href="https://www.businessinsider.com/lawmakers-grill-tech-ceos-on-online-safety-2024-1">grilling tech CEOs</a> got during a contentious Senate hearing, <a target="_blank" href="https://www.businessinsider.com/linda-yaccarino-x-twitter-senate-hearing-csam-social-media-2024-1">with one notable exception</a>.What's on deck:<ul><li>Markets: The Fed <a target="_blank" href="https://www.businessinsider.com/did-federal-reserve-cut-interest-rates-continue-pause-inflation-recession-2024-1">paused interest-rate hikes again</a>.</li><li>Tech: Google cofounder Larry Page <a target="_blank" href="https://www.businessinsider.com/larry-page-bought-puerto-rico-island-cayo-norte-2024-1">spent $32 million on a private Puerto Rican island</a> in 2018.</li><li>Business: Investors aren't buying <a target="_blank" href="https://www.businessinsider.com/byron-allen-media-group-buy-paramount-offer-why-streaming-tv-2024-1">Byron Allen's $14.3 billion bid for Paramount</a>.</li></ul>But first, we're headed to Washington.If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today">sign up here.</a><h2>The big story</h2><h3>Tech on trial</h3><div type="image" title="Photo of Big Tech leaders in the Senate" height="450" width="600" msid="107332949" hostid="261" sizebytes="31156"></div>Tech CEOs testified in a Senate hearing that turned into the type of fiery debates found on their social-media platforms.Executives for Meta, TikTok, X, Snapchat, and Discord were grilled by US lawmakers during a contentious Senate hearing on online child sexual exploitation.The hearing focused on what platforms are doing to keep young users safe and <a target="_blank" href="https://www.businessinsider.com/lawmakers-grill-tech-ceos-on-online-safety-2024-1">included tense exchanges</a>, Business Insider's Aaron Mok and Camilo Fonseca write.<a target="_blank" href="https://www.businessinsider.com/mark-zuckerberg-meta-faced-families-online-child-safety-senate-hearing-2024-1">The most shocking moment involved Meta CEO Mark Zuckerberg</a>, BI's Lauren Steussy reports. GOP Sen. Josh Hawley asked Zuckerberg to apologize to families in attendance whose children were harmed or died from the impacts of social media."No one should have to go through the things that your families have suffered, and this is why we invested so much," Zuckerberg said as he stood and addressed the families.Instagram, which is owned by Meta, came under fire last year over allegations it knowingly has <a target="_blank" href="https://www.businessinsider.com/news-today-november-28-instagram-advertising-ai-adtech-2023-11">millions of users under the age of 13 on its platform</a>.Meanwhile, TikTok CEO Shou Zi Chew, who is Singaporean, <a target="_blank" href="https://www.businessinsider.com/singaporean-tiktok-ceo-shou-zi-chew-repeatedly-asked-chinese-2024-1">grew agitated when he was repeatedly questioned</a> by Republican Sen. Tom Cotton about his citizenship and whether he has ties to the Chinese Communist Party.<div type="image" title="X CEO Linda Yaccarino" height="683" width="1024" msid="107332951" hostid="261" sizebytes="34370"></div>One CEO was able to avoid a majority of the fireworks: Linda Yaccarino.While Zuckerberg and Chew dealt with an onslaught of questions and accusations, X's Yaccarino <a target="_blank" href="https://www.businessinsider.com/linda-yaccarino-x-twitter-senate-hearing-csam-social-media-2024-1">left the hearing relatively unscathed</a>, BI's Katie Notopoulos writes.Yaccarino even touted that less than 1% of X users in the US are under 18. It's the type of statistic most social-media companies would be embarrassed by, <a target="_blank" href="https://www.businessinsider.com/linda-yaccarino-x-twitter-senate-hearing-csam-social-media-2024-1">Katie pointed out</a>, as young people are valuable to advertisers. (It's also a bit misleading, Katie added, as a <a target="_blank" href="https://www.pewresearch.org/internet/2023/12/11/teens-social-media-and-technology-2023/pi_2023-12-11_teens-and-social-media_0-01/">2023 Pew survey</a> found 20% of 13- to 17-year-olds use X.)But beyond trying to generate video clips they can tout to their constituents, lawmakers sought support from tech executives for various child-safety bills.Two of those — the "EARN IT Act" and the "STOP CSAM Act" — would enable tech companies to be sued for content on their platforms."There's no commission to go to that can punish you, there's not one law in the book [on online child safety] because you oppose everything we do, and you can't be sued," Sen. Lindsey Graham, told the CEOs. "That has to stop."We've seen Congress take a hard stance on Big Tech before, only to fall short of delivering actual results.But this time — whether because of bipartisan support or the fact real legislation is in the works — things feel different. <a target="_blank" href="https://www.businessinsider.com/facebook-mark-zuckerberg-senate-hearing-child-exploitation-social-media-law-2024-1">The result could be we actually see some changes</a>, Katie writes.<h2>3 things in markets</h2><div type="image" title="Fed Chair Jerome Powell" height="666" width="1024" msid="107332953" hostid="261" sizebytes="28248"></div><ol><li>No rate cuts from the Fed just yet. The Federal Reserve announced another pause in interest-rate hikes on Wednesday. Chair Jerome Powell <a target="_blank" href="https://www.businessinsider.com/did-federal-reserve-cut-interest-rates-continue-pause-inflation-recession-2024-1">dismissed hopes that a rate cut might come by March</a>, but some are still hopeful.</li><li>JPMorgan's dark horse CEO candidate. Troy Rohrbaugh, JPMorgan's <a target="_blank" href="https://www.businessinsider.com/jpmorgan-leadership-jamie-dimon-succession-2024-1">new co-CEO of commercial and investment banking</a>, has kept a fairly low profile at the bank for nearly 20 years. But his success in turning the bank's foreign-exchange business around and his experience managing risk <a target="_blank" href="https://www.businessinsider.com/troy-rohrbaugh-jpmorgan-jamie-dimon-succession-2024-1">make him a CEO option when Jamie Dimon retires</a>.</li><li>Commercial real estate is a sinking ship, and lenders want off. A community bank's decision to sell a $401 million portfolio of loans at a 7% discount <a target="_blank" href="https://www.businessinsider.com/banks-commercial-real-estate-loan-sales-debt-interest-rates-2024-1">shows how dire the market is getting</a>. And with $2.1 trillion of debt connected to commercial real estate coming due between now and the end of 2025, it's likely going to ramp up.</li></ol><h2>3 things in tech</h2><div type="image" title="Illustration depicting Larry Page" height="300" width="600" msid="107332956" hostid="261" sizebytes="12656"></div><ol><li>Google cofounder Larry Page bought a Puerto Rican island for $32 million. Records show that <a target="_blank" href="https://www.businessinsider.com/larry-page-bought-puerto-rico-island-cayo-norte-2024-1">Page purchased Cayo Norte</a>, an island east of Puerto Rico, in 2018. He used an LLC that BI previously identified as his — making it <a target="_blank" href="https://www.businessinsider.com/larry-page-sergey-brin-post-google-investments-businesses-wealth-2022-12">the fifth island we know belongs to Page</a>.</li><li>Elon Musk is fighting with Delaware. After a state judge blocked his $55 billion pay deal, Musk <a target="_blank" href="https://www.businessinsider.com/elon-musk-tesla-leave-delaware-judge-blocks-pay-deal-2024-1">questioned whether Tesla should change its state of incorporation</a> to Texas. His <a target="_blank" href="https://www.businessinsider.com/elon-musk-delaware-battle-goes-beyond-55-billion-pay-package-2024-1">gripe with Delaware is about more</a> than just his massive compensation package — it's about his ambitions for Tesla and SpaceX, too. Meanwhile, Neuralink executive Shivon Zilis, who shares twins with Musk, defended his <a target="_blank" href="https://www.businessinsider.com/neuralink-shivon-zilis-defends-elon-musk-55-billion-pay-package-2024-1">Tesla pay package</a>.</li><li>The White House's AI advisor said "legislative discussions" about the tech are coming. Ben Buchanan told BI the White House wants creators of copyrighted content "appropriately compensated" when it comes to AI. <a target="_blank" href="https://www.businessinsider.com/white-house-ai-copyright-debate-2024-1">Check out our full Q&amp;A with Buchanan</a>.</li></ol><h2>3 things in business</h2><div type="image" title="Paramount water tower and Byron Allen" height="3000" width="3000" msid="107332958" hostid="261" sizebytes="279282"></div><ol><li>Media entrepreneur Byron Allen wants to buy Paramount for $14.3 billion. Wall Street doesn't think that's going to happen. Investors don't think it's worth any more than $10 billion. <a target="_blank" href="https://www.businessinsider.com/byron-allen-media-group-buy-paramount-offer-why-streaming-tv-2024-1">So why does Allen think it is</a>?</li><li>The US economy is tops among rich countries. Outlooks for other G7 nations show <a target="_blank" href="https://www.businessinsider.com/economy-us-gdp-inflation-federal-reserve-economic-growth-canada-germany-2024-1">slower growth and higher inflation</a> than the US. It's also far outperforming the world's second-largest economy, China, <a target="_blank" href="https://www.businessinsider.com/china-economy-us-trade-markets-investors-policy-beijing-finance-outlook-2024-1">which is facing several economic headwinds</a>.</li><li>Ken Griffin sounds off on China. The hedge fund billionaire said any issues cropping up in Taiwan would be "catastrophic" for the <a target="_blank" href="https://www.businessinsider.com/ken-griffin-chinese-invasion-taiwan-could-spark-new-great-depression-2024-1">Chinese and American economies</a>. He was also bummed to see <a target="_blank" href="https://www.businessinsider.com/ken-griffin-on-chinas-byd-ev-outperforming-elon-musks-tesla-2024-1">Chinese EV maker BYD overtake Tesla</a>.</li></ol><h2>In other news</h2><ul><li><a target="_blank" href="https://www.businessinsider.com/enhanced-child-tax-credit-parents-passes-house-business-tax-relief-2024-1">The House passes a bill to give parents a boosted child tax credit and businesses tax relief</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/elon-musk-start-shifting-tesla-state-incorporation-to-texas-2024-2">Elon Musk says the people have spoken, and he'll make moves to shift Tesla to be incorporated in Texas</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/alaska-boeing-737-max-9-door-blowout-company-response-earnings-2024-1">We now have more details on what happened with the Alaska Airlines door plug — and how Boeing plans to address quality issues</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/flexport-lays-off-15-of-workers-2024-1">Flexport has laid off 15% of its workers.</a></li><li><a target="_blank" rel="noopener noreferrer" href="https://www.businessinsider.com/how-tiktok-music-influence-is-put-to-the-test-in-umg-fight-2024-1">Inside TikTok's fight against the most powerful music label in the industry and what could happen next.</a></li><li><a target="_blank" rel="noopener noreferrer" href="https://www.businessinsider.com/yumi-organic-baby-food-startup-valuation-down-2024-1">Exclusive: Organic baby food startup Yumi has slashed its valuation after running low on cash</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/jeep-first-ev-electric-wagoneer-s-photos-2024-1">Jeep revealed its first EV: See inside the sleek, electric Wagoneer S</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/walmart-new-stores-expansion-2024-1">Get ready for a lot more Walmarts</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/roku-poaches-publicis-exec-jay-askinasi-ad-sales-2024-1">Roku is set to announce Publicis exec Jay Askinasi as its next ad-sales boss</a>.</li></ul><h2>What's happening today</h2><ul><li>Today's earnings: Meta, Apple, Amazon, and <a target="_blank" href="https://markets.businessinsider.com/earnings-calendar">other companies are reporting today</a>.</li><li>Today marks the start of Black History Month.</li></ul>The Insider Today team: <a target="_blank" href="https://www.businessinsider.com/author/dan-defrancesco">Dan DeFrancesco</a>, deputy editor and anchor, in New York. <a target="_blank" href="https://www.businessinsider.com/author/hallam-bullock">Hallam Bullock</a>, editor, in London. <a target="_blank" href="https://www.businessinsider.com/author/jordan-parker-erb">Jordan Parker Erb</a>, editor, in New York.

A Senate hearing with top tech CEOs about online child safety had plenty of fireworks 

<ul><li>The Karnataka government bans online "games of chance".</li><li>As the IPL season has kicked in, Dream11, My11Circle, MPL Pro, Bet365, Gamezy and many others gaming platforms can come under the radar of Karnataka’s ban on online ‘game of chance’.</li><li>The offence under the law will lead to a prison term of up to three years and fine of up to ₹ 1 lakh.</li></ul>The Karnataka government on Tuesday <a href="https://economictimes.indiatimes.com/tech/technology/karnataka-assembly-passes-bill-banning-online-games-of-chance/articleshow/86407014.cms">reportedly</a> passed a bill that bans online "games of chance”. Karnataka Chief Minister Basavaraj Bommai reportedly said that the government will deal with gaming operators who run “games of chance” camouflaged as “games of skill”. Even those skill games that involve the risk of the player losing money would invite action under the law, he said. However, there is not enough clarity on which games are considered under “game of skill” and “game of chance”. As the Indian Premier League (IPL) season has kicked in, online gaming firms like Dream11, My11Circle, MPL Pro, Bet365, Gamezy and many others can come under the radar of Karnataka’s ban on online ‘game of chance’. Operating such games, sheltering such operations, and abetting and participating in such online games both cognisable and non-bailable is an offence, according to the bill. The offence will lead to a prison term of up to three years and fine of up to ₹ 1 lakh. So far, Punjab, Haryana, Bombay and Rajasthan High Courts have given <a href="https://economictimes.indiatimes.com/tech/startups/supreme-court-upholds-dream11-fantasy-sports-format-as-game-of-skill/articleshow/85040855.cms">verdict </a>supporting online gaming platforms like Dream11 and considers it as a “game of skill”. The Karnataka government has gone ahead with the ban despite the Supreme Court’s <a href="https://m.economictimes.com/tech/startups/supreme-court-upholds-dream11-fantasy-sports-format-as-game-of-skill/articleshow/85040855.cms">decision </a>that favoured the fantasy gaming industry, calling them skill gaming instead of gambling. Priyank Kharge, former information technology (IT), tourism and social welfare minister of Karnataka, batted against a blanket ban for all online games. “The government should form a committee with industry stakeholders and come out with a law that curbs online betting instead of a bill that won’t stand the test of law,” he said in a tweet. <div type="javascript" title="Custom" contenttype="Text"><cdata><![CDATA[ ]]></cdata></div> Kharge mentioned Karnataka is the gaming hub with investments of ₹4,000 crore employing thousands of people. The former minister further added that more clarity is required on certain of these issues because these are buzzing businesses. “They (online gaming platforms) are run by very young players (individuals) who have just graduated from colleges and it will kill them at this stage. Tax certainty is required as you cannot tax the entire thing, just because you feel that there is revenue which can be collected from these activities,” said Abhishek A Rastogi, partner at Khaitan &amp; Co in a Twitter live session with Business Insider on Monday. <div type="javascript" title="Custom" contenttype="Video"><cdata><![CDATA[ ]]></cdata></div> In the same conversation, another panelist, Sandeep Chilana, managing partner at Chilana &amp; Chilana Associates, said that there will be legal challenges by these online gaming entities in the court after the ban. “In the online gaming casino sectors, and the entertainment sector everything is charged under different categories of rates. So I'm saying, gambling betting is one thing, but if you see a serious casino business, you are charging me the royalty, the licence fee to operate the casino, you are charging GST [goods and services tax] on that also, then you are asking for the 20% tax only even if it's a slot machine,” said Rastogi. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/auto/news/tonetag-backed-by-amazon-and-mukesh-ambani-is-ready-to-go-beyond-payments-using-sound-waves-not-internet-and-smartphones/articleshow/86419124.cms">ToneTag, backed by both Amazon and Mukesh Ambani, is ready to go beyond payments using sound waves, not internet and smartphones</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/zee-entertainment-merges-with-sony-pictures/articleshow/86416420.cms">Marriage Story! Zee gets a white knight in Sony</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/irctc-indiamart-zee-entertainment-cummins-india-share-price-under-pressure-but-still-worth-buying/slidelist/86407477.cms">IRCTC, IndiaMART, Cummins India and others have been under pressure in the last 5 days but still worth buying</a>

Experts say Karnataka’s ban on 'games of chance' may face a legal test

Nick Sullivan was facing a sudden squeeze. For the past few years, his two Airbnb properties around Charlotte, North Carolina, had generated as much as $7,000 a month in revenue, which he and his wife stashed away for retirement. But this past fall, that income was slashed in half: Bookings dropped, his homes were empty more often than not, and his monthly revenue sank to $3,000.His cleaner was actually the first to point out the slowdown in bookings — she told Sullivan the same thing was happening with various rentals all over town. "We started panicking and started connecting with other folks who we know have short-term rentals," Sullivan told Insider. "We don't know what's going on." Sullivan is not alone. Whispers of an apocalyptic "<a href="https://www.businessinsider.com/people-worried-about-airbnb-bust-short-term-rentals-2022-11">Airbnbust</a>" have spread online among short-term-rental hosts facing <a href="https://www.businessinsider.com/airbnb-hosts-should-lower-their-expectations-occupancy-bookings-airdna-2022-7">empty booking calendars</a>, <a href="https://www.businessinsider.com/airbnb-host-falling-revenue-more-competition-dropping-prices-2022-12">stiff competition</a> for guests, and <a href="https://www.businessinsider.com/real-estate-investing-airbnb-hosts-panic-about-summer-slowdown-2022-5">tumbling earnings</a>. The shift has sparked fears of an irreversible slide in the business and a broader economic slowdown. But the hand-wringing over the idea of a downturn ignores a conflicting, but undeniable, reality: The short-term-rental business is bigger than ever, and some operators are thriving like never before. The number of nights booked at US short-term rentals reached a record high in 2022, as did total revenue, according to AirDNA, which tracks properties listed on the vacation-rental sites Airbnb and Vrbo. Rather than a collapse of the industry, the increasingly bifurcated state of the market — a bust for some, a boom for others — is a clear sign that we have hit a turning point in the long-running battle over short-term rentals. Some cities have allowed vacation-rental listings to multiply virtually unchecked, setting the stage for an oversupply that has come back to bite investors. Other places have <a href="https://www.businessinsider.com/cities-fighting-airbnbs-with-regulations-for-short-term-rentals-2022-5#dallas-texas-7">cracked down</a> and capped the number of permits, pacifying concerned citizens and preserving the profits of existing Airbnb owners. Regardless of their approach, most cities can't afford to lose the tourism dollars that flow from short-term rentals. That leaves local governments with a decision to make: Accept the boom-and-bust cycle that can come as a result of letting short-term rentals run wild, or craft rules to keep hosts happy and bring peace of mind to residents who fear their neighborhoods could one day be overrun by mini-hotels. Whichever way cities go, it's clear that the Wild West days of Airbnbs are swiftly drawing to a close. The industry is growing up — and that's good news for everyone involved. <h2>The makings of an Airbnbust</h2>Early in the pandemic, the future of Airbnb looked grim. Bookings <a href="https://www.bloomberg.com/news/articles/2020-04-03/can-airbnb-survive-coronavirus" target="_blank" rel="noopener">collapsed by more than 50%</a> in New York, Seattle, and San Francisco, and the company's valuation plunged by $5 billion, or nearly 16%, as it prepared to go public. Some wondered aloud <a href="https://www.wsj.com/articles/a-bargain-with-the-devilbill-comes-due-for-overextended-airbnb-hosts-11588083336?mod=article_inline" target="_blank" rel="noopener">if home-sharing would even exist</a> when the world emerged from lockdowns.But not only did Airbnb and competitors like Vrbo survive — they flourished. AirDNA estimated that bookings increased year over year by about 21% in 2021 and by another 21% in 2022. Encouraged by the soaring demand and record-low mortgage rates, investors jumped into the market, buying up homes in attractive locations and marketing them to the rising wave of vacationers and remote workers. The average number of short-term rentals on the market reached nearly 1.3 million in 2022, up by roughly 19% from the previous year and by about 7% from 2019, according to AirDNA. The sudden popularity was a boon for rental platforms — Airbnb <a href="https://www.wsj.com/articles/airbnb-posts-first-annual-profit-as-travel-demand-remains-strong-de436a6e" target="_blank" rel="noopener">recently reported</a> that 2022 was its first profitable year ever. But the deluge of new listings foreshadowed an inevitable correction. As inflation ticked up and the pandemic travel frenzy died down, an oversupply of vacation rentals left hosts <a href="https://www.businessinsider.com/airbnb-and-vrbo-owners-better-brace-for-2023-2022-12">fighting over visitors</a>. Jamie Lane, the vice president of research for AirDNA, said the supply shocks during the pandemic were unlike anything he'd seen in more than a decade of covering the lodging industry. Supply and demand were thrown "totally out of whack," Lane told Insider. In February, occupancy rates remained "well above pre-pandemic figures," according to AirDNA, but supply growth continued to outpace demand. As the market normalizes, some short-term-rental hosts are coming to grips with the fact that the banner days of 2021 are long gone. During a high-profile event like the Super Bowl, which draws hundreds of thousands of visitors for a weekend, hosts expect to be booked up. In past years, about 80% of available rooms in host cities like Miami and Los Angeles were taken during Super Bowl weekend. This year, however, some owners in Phoenix came up well short: As of the Thursday before the game, only 52% of rooms in Phoenix were claimed for that weekend, according to AirDNA. While occupancy creeped upwards the day before the game, some hosts had to lower prices to get rooms filled. Ric Kenworthy, who manages close to 100 properties for owners in and around the city, told Insider that in the run up to the game only half of the homes he looks after were rented out. As a result, he reduced the minimum number of nights he required for bookings and charged on average about 40% less than he'd expected. "Everyone's crying the blues right now," he said. Phoenix's problems are part of a larger trend: In the third quarter of 2022, the occupancy rate for short-term rentals fell year over year in 31 of the 50 largest US markets, according to AirDNA. The second-largest drop was in the Phoenix-Scottsdale metropolitan area, where occupancy dipped by more than 10 percentage points. This year, the story remains the same: In February, the month of the Super Bowl, occupancy in the Phoenix-Scottsdale metro was down 13.6% year over year, despite a 60% increase in demand. The number of listings, it turned out, was up 85%. Rather than some catastrophic collapse in demand, all signs point to massive oversupply as the <a href="https://www.businessinsider.com/real-estate-investing-airbnb-hosts-panic-about-summer-slowdown-2022-5">culprit for the "Airbnbust" fears that have gripped</a> many STR owners over the past year.<div type="image" title="A home located in Phoenix, Arizona." height="2783" width="5567" msid="98907493" hostid="261"></div>Arizona's state government has encouraged the growth of short-term rentals, enacting a law in 2016 that prohibited cities and towns from placing caps on the number of vacation-rental properties. This paved the way for a surge in rentals across the state, particularly in the Phoenix metro area, where the number of listings on Airbnb alone surpassed 20,000 at the start of 2023, a whopping 68% year-over-year increase. Given the sharp rise of short-term rentals there, some local lawmakers have recently <a href="https://www.businessinsider.com/scottsdale-cracks-down-airbnbs-requiring-licenses-pre-super-bowl-2023-1">called for amending the law</a>. One proponent of lacing new rules around Airbnbs is Solange Whitehead, a city councilwoman in Scottsdale. Whitehead said Scottsdale's local government is not interested in banning Airbnbs but hopes to exert more control over the number of rentals in the town and to weed out bad operators."There is a place for it," Whitehead said. "We just need regulations that protect everybody."<h2>A tale of 2 cities</h2>Rental hosts who've managed to avoid the bust may have their city government to thank, Nick Del Pego, the CEO of Deckard Technologies, told Insider. Del Pego, whose firm works with local governments around the country to keep tabs on short-term rentals, suggested that hosts in cities that have limited the number of rental properties have seen less of a drop-off in revenue in recent months."In some places, it's still the Wild West," Del Pego said. "In other places, they've put limitations, restrictions, and that in turn means that the legitimate operators tend to have a little less competition. It's certainly a mixed bag, and I've got clients on both ends of the spectrum."Cities must perform a delicate dance when it comes to short-term rentals like Airbnbs. On the one hand, they want to prevent neighborhoods from turning into blocks of hotels masquerading as single-family homes. But short-term rentals are often essential to a healthy tourism economy, particularly in vacation destinations. This push and pull has led towns — even some just a few miles apart — to take very different approaches.The local government in La Quinta, a resort city near Palm Springs in Southern California, stopped issuing new permits for short-term rentals in all but a few designated areas of the city in August 2020. And new rules that took effect in 2021 mandated that when a short-term-rental home trades hands, its permit expires. The total number of STR permits in the city has fallen by about 13% since January 2021, but the tax revenue collected from short-term rentals has steadily increased each year since 2019. In the first half of 2022, the city collected <a href="https://www.laquintaca.gov/home/showpublisheddocument/46181/637946171643870000" target="_blank" rel="noopener">30% more tax revenue</a> from STRs than it did in the same period in the prior year, suggesting that rental operators there are prospering.Adi Gross, whose company, PD Vacation Rentals, manages 10 short-term rentals in La Quinta, said 2023 is shaping up to be her best year in more than a decade of operations. "We've already booked out our high-season calendar for 2024 and started to book out for 2025 with a waiting list," Gross said.The rules in La Quinta have kept existing rental owners mostly happy. They notched another victory this fall when residents <a href="https://www.laquintaca.gov/our-city/city-government/measure-a-initiative#:~:text=The%20La%20Quinta%20qualified%20voters,Quinta%20by%20December%2031%2C%202024." target="_blank" rel="noopener">narrowly voted down</a> a ballot measure that would have dramatically reduced the number of short-term-rentals. Big Bear Lake, another popular vacation spot in Southern California, represents the flip side of La Quinta. The city has a permitting process for STRs but doesn't limit the number of rentals allowed to operate there. From 2020 to 2021, the number of nights available at short-term rentals there <a href="https://www.citybigbearlake.com/images/DOWNLOADS/CITY_DEPARTMENTS/CODE_COMPLIANCE/compliance_reports/Monthly_Compliance_Report_2021-12.pdf" target="_blank" rel="noopener">increased</a> by 17.3%, but demand grew by only 7.2%. "While demand is up relative to any point in their time period before or after COVID, the supply of available short-term rentals is up, and so that's causing the daily rates to go down," Del Pego, whose firm works with the city of Big Bear Lake, told Insider. Evan Engle, the president and general manager of Destination Big Bear, which manages more than 400 rentals on behalf of homeowners in the area, has watched this play out firsthand. Engle said demand for rentals in Big Bear Lake increased sharply when COVID-19 hit, since the city offered a convenient escape for residents of Los Angeles, San Diego, and Las Vegas. Investors jumped in to capitalize on the boom, and the market soon became saturated with short-term rentals. Then the world began opening up, and Big Bear Lake fell down the list of options for travelers. In 2022, Big Bear Lake had the second-lowest occupancy rate of all US cities, at 43%, according to AirDNA. After posting record revenue numbers in 2020 and 2021, Engle's business has returned to its pre-pandemic pace, he said. But the outlook might not be so sunny for an investor who bought a home there when prices were at record highs."People who purchased homes within the last two years paid 30% or 40% more than the previous owner, expecting to have 30% or 40% more revenue, and that's just not happening," Engle said.Engle said that despite the wild fluctuations of the past few years, he's skeptical of the idea that more regulation, like a cap on the number of rentals, would help owners in the long term. Instead, he's betting the market will "self-correct." If an investor isn't making the money they'd hoped for, they may just end up selling or renting out the home to a long-term tenant, Engle said.<h2>The short-term-rental business grows up</h2>The rise of short-term rentals during the pandemic, and the struggles of hosts confronting an oversupply, are evidence that local governments can no longer afford to ignore the impact of Airbnbs. They can take a hands-off approach or find a path for growth that ensures both residents and rental hosts end up on stable footing."What I think you're going to see is more caps, or at least more caps in certain neighborhoods," Del Pego said. "In a lot of places, I'm certainly seeing the idea of figuring out the right number for a community becoming more and more prevalent."Lane of AirDNA argued that some level of regulation, like requiring hosts to obtain a permit, is necessary to help bring the industry out of the shadows and reduce risk for investors."If you're investing into a market and there's no regulation, you just don't know the rules of the road," Lane said. "You don't know when regulations are going to be put in place and what those regulations are going to be." But Lane, like Engle, was averse to the idea of cities capping the number of short-term-rentals, saying it creates an "almost unfair advantage" for incumbent hosts and curbs competition.A decrease in the number of short-term rentals would probably mean higher nightly rates in the future as supply falls back in line with demand — AirDNA projects the average rate will rise to $278.19 a night this year, a roughly 2% increase. But the result of more regulation may be a better and more consistent experience for guests and their neighbors. In response to increasing concerns from residents during the pandemic, some cities have more strictly enforced rules meant to minimize noise complaints and other disruptions from short-term rentals and cracked down on hosts who don't have a license. Del Pego suggested that for guests, a more professionalized industry would also mean fewer hassles like exorbitant security deposits, hidden charges, or dirty rentals. "I think the day has come that short-term rentals are now thought of like a lot of the other businesses: something that needs to be managed and controlled from a planning perspective so that the balance for a city or a county is healthy," Del Pego said. "A lot of cities and counties are leaning in, and I think when Airbnbs were new they were just standing back."Reaching that balance won't be easy. But when short-term rental owners do well — without disrupting neighborhoods — cities get more tax revenue and a thriving tourism economy.There's one thing pretty much everyone can agree on: Short-term rentals are here to stay. AirDNA has forecast that even with a drop in occupancy, the number of available listings is likely to increase to more than 1.4 million this year, which would be a 9% jump from 2022. A business the size of Airbnb "isn't going anywhere," Del Pego said. "The business is just maturing."<a href="https://www.businessinsider.com/author/james-rodriguez" rel="">James Rodriguez</a> is a senior reporter for Insider.<a href="https://www.businessinsider.com/author/dan-latu">Dan Latu</a> is a real estate reporter for Insider.

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