28 per cent GST on online gaming stays; to be reviewed after 6 months of roll-out

GST Council on Wednesday decided to levy a 28 per cent GST on online gaming and casinos on the face value of bets at entry level

New Delhi: The GST Council on Wednesday decided to levy a 28 per cent GST on online gaming and casinos on the face value of bets at entry level, even though three states — Delhi, Goa and Sikkim — expressed dissent.

The Centre will bring amendments to the Central GST law in the ongoing monsoon session of Parliament, following which states will pass the amendments in their respective assemblies to pave way for introduction of changes in law by October 1.

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“The valuation may be done based on the amount paid or payable or deposited with the supplier by or on behalf of the player, excluding the amount entered into games bets out of winnings of previous games and bets and not on the total value of each bets placed. Entry (level) whatever they pay to get chips and not what they pay in each game,” Sitharaman said.

Giving an example, she said if a bet is placed for say Rs 1,000, and the player wins Rs 300, then if the player again places a bet of Rs 1,300, then GST will not be levied on the winning amount.

A review of the taxation of online gaming and casinos will be undertaken after 6 months or around April 2024 to see if any change in rules is required.

Briefing reporters after the 51st GST Council meeting here, finance minister Nirmala Sitharaman said for the purpose of GST levy, the valuation of supply of online gaming and casinos will be done based on the amount paid or deposited with the supplier, excluding the winning amount in the bet.

Revenue secretary Sanjay Malhotra said that offshore gaming platforms will have to register themselves with the GST authorities.

In case they do not follow the law, the government will invoke the provisions of the Information Technology Act to block those sites, Malhotra added.

The GST Council — the highest decision making body of the new indirect tax regime that comprises Union finance minister and representatives of all states — discussed the language of amendments that will be needed to enabling taxing of online gaming and casinos.

“We will undertake amendments to CGST Act at the earliest, in this session itself. From October 1, it will be implemented,” Sitharaman said.

Malhotra said the amendments will specifically define online gaming, online money gaming, virtual digital assets used to pay for online games, and supplier in case of online gaming.

Asked about the impact on the ongoing legal cases in case of online gaming, Malhotra said the decision of the GST Council is only clarificatory in nature as online gaming was always an actionable claim in the nature of betting and gambling on which 28 per cent GST is leviable.

The Council had at its meeting last month decided to levy a 28 per cent GST on full face value of bets placed and Wednesday’s meeting was to deliberate on the tax law changes that would be required to implement it.

Sitharaman said Delhi finance minister opposed 28 per cent tax on online gaming and wanted the matter to go back to group of ministers. Goa and Sikkim, whose revenues come from casinos, said 28 per cent GST should be levied on GGR (gross gaming revenue) or platform fees and not on face value.

Sitharaman, however, said other states, including Chhattisgarh, West Bengal, Karnataka, Gujarat, Maharashtra and Uttar Pradesh, wanted the decision taken at the Council meeting last month to be implemented at the earliest.