GST Council Imposes 28% Tax on Turnover of Online Gaming Firms
- ByStartupStory | July 12, 2023
The Goods and Services Tax (GST) Council, comprising representatives of all states and Union Territories, made a significant decision on Tuesday to impose a 28% tax on the turnover of online gaming companies, horse racing, and casinos. The panel, led by Union Finance Minister Nirmala Sitharaman, also made other key adjustments, including lowering the service tax on food and beverages consumed in cinema halls to 5% and modifying the definition of an SUV for the purpose of attracting an additional cess on top of the GST rate.
The tax on food and beverages served in cinema halls will now be levied at 5%, equivalent to the tax imposed on restaurants, instead of the previous 18% applicable to cinema halls. Sitharaman clarified that the revised definition of an SUV for cess purposes will consider parameters such as a length of 4 meters or above, an engine capacity of 1,500 cc and above, and an unladed ground clearance of a minimum of 170 mm.
Regarding the taxation of online games, bets in casinos, and horse racing, the GST Council decided to impose a 28% GST on the face value or payments made for participation. This tax rate was determined based on the recommendation of a group of ministers tasked with examining the taxation of these sectors. The group deliberated whether to impose a 28% GST on the face value of bets, gross gaming revenue, or platform fees.
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