28% GST stays on online gaming, casinos; Council to review taxation in six months from implementation

The Goods and Services Tax (GST) Council on Wednesday retained the 28% tax on online gaming, casinos and horse racing, said Union finance minister Nirmala Sitharaman.

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 28% tax on full face value of bets in online gaming, casinos and horse racing.

During the meeting, Delhi, Goa and Sikkim sought review of the 28% online gaming tax, stated Sitharaman during a press conference.

"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.

GST applicable on entry level

The 28% GST announced by the Council will be applicable on 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.

Earlier, the Council had earlier stated that the tax on online gaming will be imposed without any differentiation of whether it's based on skill or chance.

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

The committee had suggested insertion of a new rule under which value of supply of online gaming would be the total amount deposited with the online gaming platforms by way of money or virtual digital assets on behalf of the player.

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

The All India Gaming Federation (AIGF), which represents companies like Nazara, GamesKraft, Zupee and Winzo, had termed the decision by the GST Council as "unconstitutional, irrational, and egregious".

A letter to Sitharaman

Gamers from Tier II and Tier III cities under the aegis of 'Indian Gamers United' in a letter to Sitharaman has 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.

Responding to a query on how the GST authorities will tax the online gaming companies operating from overseas location, Minister of State for Finance Pankaj Chaudhary said there are sufficient enforcement provisions in GST laws to take action against such platforms who default in paying taxes.

"Sufficient enforcement provisions exist to take action against offshore platforms, which do not pay prescribed GST," Chaudhary said in a written reply in the Rajya Sabha.

(With inputs from agencies)