GST Council sticks to its plan to collect 28% tax on online gaming

The 51st meeting of the Goods and Services Tax (GST) Council has decided to impose a 28% tax on the full face value of bets placed on online gaming, which will be implemented from 1st October.

GST Council’s Decision and Implementation

The Finance Minister of India, Nirmala Sitharaman, announced that the 28% GST on online gaming will take effect from 1st October.
The decision aims to provide clarity on the taxation of supplies in casinos, horse racing, and online gaming.
The council recommended amendments in the CGST Act 2017 and IGST Act 2017 to facilitate this implementation.
Additionally, a specific provision in the IGST Act, 2017 will be inserted to address the liability to pay GST on the supply of online money gaming from suppliers located outside India to individuals within India.

Valuation of Online Gaming and Casinos

The GST Council recommended that the valuation of supply for online gaming and actionable claims in casinos should be based on the amount paid or payable to the supplier by the player, excluding the amount entered into games/bets from previous winnings.
This decision is aimed at providing clarity on how to determine the taxable value and streamline the taxation process for these sectors.

State Minister Opposition and Varied Opinions

While some states, including Delhi, opposed the levy of the 28% tax on online gaming, others like Goa and Sikkim expressed their preference for taxing the Gross Gaming Revenue (GGR) rather than the face value of bets. On the other hand, states like Karnataka, Gujarat, Maharashtra, and Uttar Pradesh supported the decision taken at the last GST Council meeting for the implementation of the new levy.

About the GST Council

The GST Council, a constitutional body with the responsibility of proposing measures for the implementation of the Goods and Services Tax (GST) in India, conducted its first session in September 2016. Since its inception, it has been meeting regularly to deliberate and decide on various GST-related issues.
According to Article 279A (1) of the amended Constitution, the President must constitute the GST Council within 60 days of the commencement of Article 279A. The Council has been instrumental in making significant decisions regarding the GST, encompassing tax rates, exemptions, thresholds, and administrative procedures.