GST Council announces 28% GST on Online Gaming, Check Reactions- The 50th meeting of the Goods and Services Tax (GST) Council was chaired by Finance Minister Nirmala Sitharaman on July 11 in New Delhi. In this meeting, it was decided that the government will impose 28 percent GST on online gaming and online betting services. Here is everything you need to know about this issue.
GST Council announces 28% GST on Online Gaming, Check Reactions
The much-awaited decision by the GST Council for the tax rate on online gaming, casinos, and horse racing has been finalized. It has been decided that online gaming will be taxed at 28 percent on the full face value amount from today. This decision crushes the pleas of the online companies that had asked the council to levy GST on their gross gaming revenue (GGR) previously.
#GST council agrees to levy 28% tax on online gaming, horse racing and casinos. #GSTCouncilMeeting
Read live updates: https://t.co/vhvRPcgG8E pic.twitter.com/TGZqzr2E8F
— BQ Prime (@bqprime) July 11, 2023
Apart from online gaming, casinos, and horse racing will also levy GST at the same tax rate on full face value. The GST Council has also decided to not make any distinction between games of skill and games of chance while considering the online gaming sector.
During the meeting, the Council took note of the report submitted by the Group of Ministers (GoM). The report was submitted in June 2022 but was given more time to revisit the final tax rate suggestion. The GST Council’s report recommended a tax rate of 28% of the consideration along with the introduction of a contest entry fee.
This additional tax on entry fees has disappointed many online gaming firms. They consider it not in line with international practices and expect the decision to hurt many smaller startups in this industry.
The decision on this issue was planned to be listed in the 48th GST Council meeting back in December 2022. Unfortunately, it got delayed to the 49th meeting in February 2023, and again to the 50th meeting held on Tuesday, June 11. In between this decision by the GST Council, the Ministry of Electronics and Information Technology (MeitY) has also announced amendments to its online gaming rules.
Mentioned below is a statement from Mr. Roland Landers, CEO – The All India Gaming Federation
“We believe this decision by the GST Council is unconstitutional, irrational, and egregious. The decision ignores over 60 years of settled legal jurisprudence and lumps online skill gaming with gambling activities. This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms.
It is very unfortunate that when the Central Government has been supporting the industry – in terms of online gaming rules, clarity on TDS, etc such a legally untenable decision has been taken, ignoring the views of most GoM states who studied this matter in detail. We hope that the Government will reconsider this recommendation and not implement it, as it will be catastrophic for the 1 trillion dollar digit economy dream of the Hon’ble PM.”
The convenor of the GoM, Meghalaya Chief Minister Conrad Sangma, stated in the report that the GST may be charged only on the GGR for casinos and horse racing betting institutions. For online gaming, an escrow account can be created wherein the prize money that needs to be paid out to the winners can be segregated from the platform fee and pooled for easy tax administration.
Stay tuned with us to get the latest updates from the gaming industry in India and across the world.
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