GST Council meet: 28% tax on online gaming to become effective from 1 Oct, says FM Sitharaman, to review after 6 months

The decision to impose a 28% tax on the full face value of bets placed on online gaming will be implemented from October 1, 2023. The GST Council will review the implementation of the 28% GST on online gaming and casinos after six months.

Finance Minister Nirmala Sitharaman said that Delhi Finance Minister Manish Sisodia opposed the levy of the tax on online gaming, while Goa and Sikkim wanted the levy to be based on gross gaming revenue (GGR) rather than the full face value of bets placed.

However, other states, including Karnataka, Gujarat, Maharashtra, and Uttar Pradesh, wanted the decision taken at the last GST Council meeting to be implemented. The new levy, after required changes are made in the central and state laws, is likely to come into effect from October 1.

The GST Council in its 51st meeting recommended certain amendments in the Central Goods and Services Tax (CGST) Act, 2017, and the Integrated Goods and Services Tax (IGST) Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing, and online gaming.

The Council also recommended to insert a specific provision in the IGST Act, 2017, to provide for liability to pay GST on the supply of online money gaming by a supplier located outside India to a person in India. The Council also recommended that such suppliers be required to register in India and that their access to the public be blocked if they fail to comply with the registration and payment of tax requirements.

The Council also recommended that the valuation of supply of online gaming and actionable claims in casinos be 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 games/bets out of winnings of previous games/bets) and not on the total value of each bet placed.

The Council recommended that the CGST Rules, 2017, be amended to insert specific provisions for the valuation of supply of online gaming and supply of actionable claims in casinos. The Council also recommended the issuance of certain notifications/amendments in notifications related to the issue.

The Council decided that efforts will be made to complete the process of making amendments in the Act at the earliest and bring the amendments into effect from October 1, 2023.

The Federation of Indian Fantasy Sports (FIFS) and the Esports Federation of India (EGF), which represent 50 Indian online gaming companies, said in a statement that the new tax framework would lead to a "very burdensome 350% increase in GST" and set the Indian online gaming industry back several years. However, they said that it would allow gaming companies a "fighting chance to innovate and rebuild the foundation of gaming in India."

(With agency inputs)