GST Council to Review 28% Tax on Online Gaming Six Months After Implementation

• ByStartupStory     |    August 3, 2023

The Goods and Services (GST) Council, led by Finance Minister Nirmala Sitharaman, held its 51st meeting virtually on August 2, during which it decided to review the 28% tax levied on online gaming and casinos. The tax will come into effect from October 1, 2023, and will be reevaluated six months after implementation.

The decision to impose a 28% tax on online games was taken in the 50th GST Council meeting and was met with near-unanimous support, except for opposition from a few states. Delhi’s finance minister opposed the tax on online gaming, while Goa and Sikkim advocated for the tax to be levied on the gross gaming revenue (GGR) rather than the face value.

On the other hand, states like Karnataka, Gujarat, Maharashtra, and Uttar Pradesh were in favor of implementing the decision taken at the previous meeting.

In a post-meeting press conference, Finance Minister Sitharaman explained, “The council recommended that valuation of supply on online gaming and actionable claims in casinos may be done based on the amount paid or payable to or deposited with the supplier by/or on behalf of the player, excluding the amount entered into the games, bets out of winnings of previous games and not on the total value of each bet placed…”

Following the outcome of the 51st GST Council meeting, the E-Gaming Federation (EGF) and Federation of Indian Fantasy Sports (FIFS) issued a joint statement expressing their views on the matter. The statement reads, “EGF and FIFS, which represent 50 Indian online gaming companies, appreciate the government addressing the industry’s concerns on the issue of repeat taxation. The new tax framework, while clarifying and resolving uncertainty, will lead to a very burdensome 350 per cent increase in GST and set the Indian online gaming industry back several years. However, it will allow gaming companies a fighting chance to innovate and rebuild the foundation of gaming in India.”

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