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The decision to amend the CGST law faced opposition from Delhi, Goa, and Sikkim. They sought a review of the tax rate.
Revenue Secretary Sanjay Malhotra assured that the language of the CGST amendment would consider Tamil Nadu’s prohibition on online gaming.
Council today took up Law amendment to implement 28 per cent GST on online gaming, horse racing and casinos.
FM said that the council recommended that valuation of supply on online gaming and actionable claims in casinos may be done based on the amount paid or payable or payable to or deposited with the supplier by/or on behalf of the player, excluding the amount entered into the games, bets out of winnings of previous games and not on the total value of each bet placed.
It was decided to tax them at 28 per cent on the full face value. The meeting had a specific agenda of what amendments have to be made to the GST law.
Earlier, online gamers’ association requested the finance minister for a reduction of 28 per cent GST, saying high taxation would lead to mushrooming of illegal gaming firms. Gamers from Tier II and Tier III cities under the aegis of ‘Indian Gamers United’ in an open letter to finance minister Nirmala Sitharaman had said that high taxation will push the gamers towards illegal and offshore platforms where no tax is payable but will put the gamers into a very high risk.
The association also pitched for making a distinction between games of chance like gambling and games of skill like gaming. Gaming is a skill-based activity and cannot be clubbed together with games of luck like gambling and horse racing so taxation requires a relook and making it tax friendly, ‘Indian Gamers United’ said in a statement.
The meeting was chaired by finance minister Nirmala Sitharaman at 4 PM today. The high-level meeting took place less than a month after the previous meeting and it is will be held via video-conferencing.
In the 50th GST Council Meeting on July 11, several key decisions were announced for various sectors in India. The GST Council had agreed to levy a 28 per cent tax on online gaming, casinos and horse racing and the tax would be levied on full face value. The panel, headed by the Union finance minister with representatives of all states and UTs, decided on the tax rate based on recommendation of a group of ministers that looked at taxing casinos, horse racing and online gaming.
The issue before the GoM (group of ministers) was whether to impose a 28 per cent GST on the face value of bets, or gross gaming revenue, or just on platform fees. Nirmala Sitharaman said the tax will be levied on the entire value.
Soon after the announcement, industry experts reacted saying that the GST rate is a major setback for Indian players. Federation of Indian Fantasy Sports said that this decision will have a chilling effect on the USD 2.5 billion of FDI already invested by investors and jeopardise potentially any further FDI in the sector.
The council decided to do away with the distinction of game of skill and chance in the case of online gaming. 28 per cent tax would be levied on the full face value of bets.
The GoM in its first report submitted to the GST Council in June 2022, had suggested that 28 per cent Goods and Services Tax (GST) be levied on full value of the bets placed, including the contest entry fee paid by the player on participating in the game. In cases of race courses, the GoM recommended that GST be levied on the full value of bets pooled in the totalisators and placed with the bookmakers.
Meanwhile, ahead of the GST council meeting today, online gamers’ association requested finance minister Nirmala Sitharaman for a reduction of 28 per cent Goods and Services Tax (GST), saying high taxation would lead to mushrooming of illegal gaming firms.
Gamers from Tier II and Tier III cities under the aegis of ‘Indian Gamers United’ in an open letter to finance minister Nirmala Sitharaman said that high taxation will push the gamers towards illegal and offshore platforms where no tax is payable but will put the gamers into a very high risk.
The association also pitched for making a distinction between games of chance like gambling and games of skill like gaming. Gaming is a skill-based activity and cannot be clubbed together with games of luck like gambling and horse racing so taxation requires a relook and making it tax friendly, ‘Indian Gamers United’ said in a statement.
Since several of these games come with the option to earn monetary rewards, this is giving rise to a segment where young people are using their gaming skills to earn money in their free time and becoming part of the gig economy, it said. An unviable rate of GST at the rate of 28 per cent on online games will have adverse impact on this growing industry, it said.
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