In its 51st meeting, the Goods and Services Tax (GST) Council, headed by Union Finance Minister Nirmala Sitharaman, decided to uphold the 28% tax on online gaming, casinos, and horse racing, while also discussing the implementation modalities. Addressing the media after the Council meeting, Sitharaman revealed that the 28% GST on online gaming is slated for implementation from October 1 and will undergo a review six months after its enforcement.(Ref.: https://www.thehindu.com/business/Economy/gst-council-meeting-28-tax-on-online-gaming-to-be-implemented-from-october-1-sitharaman/article67150852.ece)
The 28% tax will apply to the initial amount paid for each game and will not be levied on the total value of bets placed. Additionally, the winnings, which may be used for further bets, will not be subject to GST.
While the tax proposal received support from states such as Maharashtra, Gujarat, Chhattisgarh, West Bengal, Bihar, Delhi, Goa, and Sikkim expressed the need for a review. Tamil Nadu, where such games are banned, also expressed apprehensions.
Sitharaman explained that taxing the gross gaming revenue (GGR) at 28% would result in a net revenue of only 11-12%, whereas the current 18% tax on GGR generates a net revenue of 8-9%.
The gaming industry has been voicing its opposition to the tax since the 50th GST Council meeting. The All India Gaming Federation (AIGF) criticized the decision. (Ref.: https://economictimes.indiatimes.com/news/newsblogs/daily-news-and-latest-updates-live-2-august-2023/liveblog/msid-102331633,curpg-2.cms)
The 51st GST Council meeting, conducted via video conferencing on August 2, saw the participation of Union Minister of State for Finance Pankaj Chaudhary, finance ministers of states and UTs (with legislature), and senior officials from the Union government and states. Sikkim and Goa expressed dissent regarding the tax modalities for casino users. The committee proposed the addition of a new rule where the supply of online gaming would be the aggregate amount deposited with the online gaming platforms on behalf of the player.
The decision to maintain the 28% tax on online gaming has sparked diverse reactions from the industry. The Federation of Indian Fantasy Sports (FIFS) and E-Gaming Federation (EGF), representing 50 Indian online gaming companies, appreciated the government’s efforts in addressing industry concerns but expressed concerns over the 350% increase in GST, which may impede the growth of the Indian online gaming industry.
