Online Gaming Faces New Tax Regime as Lok Sabha Greenlights GST Amendment Bills at 28% Levy

• ByStartupStory     |    August 11, 2023

During the monsoon session of Parliament, the Lok Sabha successfully passed amendments to two key Goods and Services Tax (GST) bills, focusing on the taxation of online gaming, casinos, and horse racing clubs. Finance Minister Nirmala Sitharaman presented these bills, which propose a significant change by imposing a 28 percent tax on the entire nominal value of wagers associated with online gaming, casinos, and horse race clubs. The two bills in question are the Central Goods and Services Tax (Amendment) Bill, 2023, and the Integrated Goods and Services Tax (Amendment) Bill, 2023. However, these amendments have been met with protests.

The primary objective of these proposed changes is to introduce specific clauses into Schedule III of the CGST Act, 2017. These clauses are intended to provide clear and explicit guidelines for the taxation of transactions within the domains of casinos, horse racing, and online gaming. Additionally, a corresponding amendment within the IGST Act aims to establish GST obligations for offshore entities involved in online money gaming. As per this amendment, offshore entities would be required to register for GST within India.

Furthermore, these revisions encompass provisions designed to restrict access to offshore online gaming platforms if they fail to comply with the necessary registration and tax payment requirements.

These amendments have garnered approval from the GST Council, a decision that was made in the week leading up to the passage of these bills in the Lok Sabha. A notable aspect of this council’s decision is the agreement to impose a 28 percent GST on the total nominal value of entry-level bets made within the realms of online gaming, casinos, and horse racing.

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