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GST Council Finalizes 28% Tax on Online Gaming, Decision Effective from October 1


Based on the information provided, the 51st GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, has recommended certain amendments in the CGST Act 2017 and IGST Act 2017, including an amendment in Schedule III of CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing, and online gaming. The Council also recommended inserting a specific provision in the IGST Act, 2017, to provide for liability to pay GST on the supply of online money gaming by a supplier located outside India to a person in India, for single registration in India for the said supplier through a simplified registration scheme. Additionally, the Council recommended GST on valuation of supply of online gaming and actionable claims in casinos at an entry level of 28%.

The GST Council meeting was held on August 2, 2023, and the decision to impose 28% GST on online gaming is expected to be implemented from October 1, 2023. However, the decision will be reviewed after six months from the date of implementation. The Council discussed the language of amendments needed to enable taxing online gaming and clarified that the 28% tax will be applicable on the full face value of bets placed in online gaming, casinos, and horse racing.

It’s important to note that the decision has been met with opposition from some industry stakeholders, including online gaming companies and investors, who have raised concerns about the potential impact on the industry’s growth and viability. Some industry representatives have requested a review of the 28% GST rate, arguing that the decision may adversely affect investments in the sector.

The GST Council’s decision to tax online gaming and casinos has been a subject of debate, and the Council is taking steps to address industry concerns and implement the changes in the GST law and rules to include online gaming and horse racing under the “actionable claim” head for taxation purposes.

In a recent meeting, the Goods and Services Tax (GST) Council approved the imposition of a 28% tax on online gaming, casinos, and horse racing, starting from October 1. The valuation of supply for taxation will be based on the amount paid or payable to the supplier by the player, excluding amounts from previous game winnings. The decision comes after several discussions on the tax law changes required for its implementation.

During the meeting, Delhi finance minister expressed opposition to the tax, while Goa and Sikkim advocated for taxing the Gross Gaming Revenue (GGR) instead of the face value. The council, however, stuck to its earlier decision to levy a uniform 28% tax on the face value of bets in online gaming, casinos, and horse racing.

To address concerns about potential double taxation, the council clarified that taxing online gaming would not legalize it in states that have banned such activities. Moreover, a review of the tax levy will be conducted after six months of its implementation.

The meeting also discussed legal amendments to include online gaming and horse racing under “actionable claim” and determine the value of supply for different gaming categories. Foreign online gaming companies may be required to appoint a representative in India to avoid penalties or prohibition from operating domestically.

The decision has faced opposition from top investors and gaming companies, who believe it could negatively impact investments and the industry’s growth. However, the GST Council maintained its stance on the tax, emphasizing that it is necessary to address revenue concerns.

The All India Gaming Federation (AIGF) and ‘Indian Gamers United’ have raised objections, stating that gaming should be treated differently from games of chance like gambling, given its skill-based nature. They requested a tax-friendly approach for the gaming industry.

In conclusion, the GST Council has finalized a 28% tax on online gaming, casinos, and horse racing, effective from October 1. The decision will be reviewed after six months of implementation. Despite opposition and concerns from the gaming industry, the council maintains that the tax is essential for revenue generation.

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