The Goods and Services Tax (GST) Council held a meeting on Tuesday and announced that it would impose a 28% tax on the turnover of online gaming companies, horse racing, and casinos. This decision was based on the recommendation of a group of ministers that examined the taxation of these sectors. The issue faced by the group of ministers was whether to impose a 28% GST on the face value of bets, or gross gaming revenue, or just on platform fees. In the end, the Council decided to impose the tax on the entire value.
To implement this decision, the central government will introduce clarificatory amendments to the GST Act in the forthcoming monsoon session of Parliament. Revenue Secretary Sanjay Malhotra stated that the law will be drafted and presented during the session in order to get it passed. However, he also noted that the implementation will only occur when state legislatures have also made amendments to their respective state GST laws, which will take some time.
Malhotra clarified that the tax on online gaming companies does not have retrospective implications. He explained that the view of the Council is that online games, whether based on skill or chance, are subject to a 28% tax on their full face value or the payment made to the gaming platform. He further mentioned that these companies have been paying tax at lower rates on Gross Gaming Revenue (GGR), which is less than 5% and is applicable to food.
The decision of the GST Council to tax online gaming, horse racing, and casinos at 28% without differentiating based on skill or chance will have significant implications for the industry. It remains to be seen how the implementation of this tax will affect the growth and operations of various online gaming companies, as well as the revenue generated by horse racing and casinos.
In conclusion, the GST Council’s decision reflects the government’s effort to expand the tax base and generate revenue from sectors that were previously not subject to such taxation. The forthcoming amendments to the GST Act will provide further clarity on the exact procedures and requirements for implementing this tax on online gaming, horse racing, and casinos.
