Finance Minister Anticipates Revenue Surge from 28% Tax Rate on Online Gaming and Casinos
- ByStartupStory | August 8, 2023
Finance Minister Nirmala Sitharaman has expressed her belief that imposing a 28% Goods and Services Tax (GST) on the complete face value of transactions within casinos, race courses, and online gaming platforms will lead to a substantial rise in revenue. The online gaming sector, as highlighted in the Draft National Policy for Growth of Animation, Visual Effects, Gaming, Comic & Extended Reality sector in India by the Information and Broadcasting Ministry, observed a remarkable growth of 28% in 2021, amounting to $1.9 billion according to NITI Aayog estimates.
In response to an inquiry in the Rajya Sabha, Sitharaman detailed the existing tax structures. Presently, casinos are subject to a 28% GST on their Gross Gaming Revenue (GGR). Similarly, the online gaming industry, dealing with actionable claims, and certain horse race clubs are currently subjected to an 18% GST rate on platform fees/commissions, which range from 5% to 20% of the total face value. However, a few horse race clubs bear a 28% GST on the complete face value.
Sitharaman highlighted an ongoing dispute where online gaming companies offering actionable claims and specific horse race clubs, subject to the 18% tax rate on platform fees/commissions, are contesting the imposition of the 28% tax on actionable claims pertaining to betting and gambling.”It is anticipated that the levy of 28% on full face value, as recommended in the 50th GST Council meeting, will result in an increase of revenue from current levels,” Sitharaman added. The minister anticipates that this alteration will lead to an augmented revenue stream compared to the current levels.
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