In July, online gaming was hit with a 28% GST, causing concern among major players in the industry. These stakeholders appealed to the GST Council to reconsider this decision in hopes that the meeting on August 2 would yield favorable results. Unfortunately, the Council has confirmed that the 28% GST will remain for online gaming and casinos. However, there may still be some good news to come.
So What’s the Catch?
The GST Council has recently made some changes on how taxes will be imposed on players. With the latest revision, taxes will not be levied based on the amount entered into the game, bets made from previous winnings, bets made in online money gaming, or on the total value of each bet placed – which is the case for casinos. As an example, if a player places a bet of Rs 1,000 and wins Rs 300, and decides to continue playing with Rs 1,300, GST will not be levied on the winning amount of Rs 300. Additionally, the Council has decided to review this decision once again after six months of implementing the changes.
In this review, we will discuss the impact of recent changes on the gaming industry. As stated by Revenue Secretary Sanjay Malhotra, overseas gaming platforms must register with GST authorities to ensure fairness. Failure to comply will result in being blocked under the Information Technology Act. Additionally, payments made through virtual digital assets will now be subject to 28% GST. This measure protects local players in India’s online gaming industry from offshore gaming firms taking advantage of the changes.
28% GST on Online Gaming: What was announced
During the 51st meeting, Union Finance Minister Nirmala Sitharaman announced that online gaming and casinos will be levied 28% at face value at entry level. The new taxes are expected to be effective from October 1. There were some states that dissented but even more were asking for early implementation. The states asking for special consideration include Goa and Sikkim. The Union Minister added that the decision was not taken with consensus, similar to when the GST change on the lottery was announced.