 "New Delhi: Union Finance Minister Nirmala Sitharaman with Union MoS for Finance Pankaj Chaudhary and Revenue Secretary Sanjay Malhotra during the 51st Goods and Services Tax (GST) Council Meeting, in New Delhi, Wednesday, Aug. 2, 2023. (PTI Photo)")
A 28 per cent tax on the full face value of bets placed on online gaming will be imposed from October 1, Finance Minister Nirmala Sitharaman said during the 51st GST Council meeting.
The GST Council will review the implementation of a 28 per cent goods and services tax (GST) on online gaming and casinos after six months.
FM Sitharaman said that Delhi Finance Minister Atishi Singh opposed the tax levy on online gaming, while Goa and Sikkim wanted the levy on GGR (gross gaming revenue) and not on face value.
What did Delhi FM say about tax on the gaming industry at the 51st GST Council Meeting?
Delhi FM Atishi Marlena Singh said there is a need to re-evaluate the imposed rates to foster the growth of new start-ups in the Indian online gaming industry.
"Investors from India and abroad are attracted to this industry, leading to investments in the millions and billions of dollars. Levying heavy taxes on this industry will burden it and discourage investment," she said.
She added that the Centre should focus on promoting start-ups.
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Amendments to provide clarity on taxation
The GST Council meeting recommended amendments in the CGST Act, 2017 and IGST Act, 2017, and Schedule III of the CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing, and online gaming.
During the meeting, the Council recommended inserting 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 who is outside India to a person in India for single registration in India for the said supplier through a simplified registration scheme and for blocking access by the public to any information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such supplier in case of failure to comply with provisions of registration and payment of tax.
The Council said that the valuation of online gaming supply and actionable claims in casinos might be done based on the amount paid or payable to or deposited with the supplier, by or on behalf of the player and not on the total value of each bet placed.
It was decided that the CGST Rules, 2017, may be amended to insert specific provisions for the valuation of the supply of online gaming and the supply of actionable claims in casinos accordingly.
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The Council said that it would try to complete the process of making amendments to the Act at the earliest and bring the amendments into effect from October 1.
Valuation of supply to be done excluding amount in games, says FM Sitharaman
Following the meeting, FM Sitharaman said, "The Council recommended that valuation of supply on online gaming and actionable claims in casinos may be done based on the amount paid or payable or payable to or deposited with the supplier by/or on behalf of the player, excluding the amount entered into the games, bets out of winnings of previous games and not on the total value of each bet placed...."
The new framework will take the Indian gaming industry back several years: FIFS
The Federation of Indian Fantasy Sports (FIFS) and the E-Gaming Federation (EGF) said that the new tax framework would lead to a 350 per cent increase in GST and set the Indian online gaming industry back several years.
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"However, it will allow gaming companies a fighting chance to innovate and rebuild the foundation of gaming in India," they stated.
