New Delhi (Agency): The Central Government of India, represented by Revenue Secretary Sanjay Malhotra, has announced its plans to bring forth clarifying amendments to the GST (Goods and Services Tax) Act. This comes as a move to put into effect the GST Council’s decision to impose a 28% tax on online gaming, casino, and horse racing activities.
This news was disclosed in an interview Malhotra had with PTI, where he shared that the legislative proposal would be introduced in the upcoming monsoon session of Parliament, which is set to begin on July 20 and end on August 11, 2023. “It will be our effort to draft the law and introduce it in Parliament and get it passed in the monsoon session,” he mentioned.
However, the official also pointed out that the execution of this revised tax rate can only happen after state legislatures pass the necessary amendments in their respective state GST laws. He acknowledged that this process could take a while.
Providing more insight, Malhotra described the move as a “clarificatory amendment.” He emphasized, “It has been our view that online games for stakes depend on outcomes…whether game of skill or game of chance. The Council has only reiterated and confirmed that view that these games are taxable at 28% on the full face value or the payment which is made to the online gaming platform.”
Online gaming companies, in the past, have been taxed at lower rates on Gross Gaming Revenue (GGR), which is typically less than 5% and applicable on food. But this new amendment will change this, imposing a tax of 28% on the companies’ turnover.
The decision was reached during a GST Council meeting held on Tuesday. This tax rate was recommended by a group of ministers tasked with looking at taxing casinos, horse racing, and online gaming. The main issue for this group was whether to impose a 28% GST on the face value of bets, or gross gaming revenue, or just on platform fees. After careful consideration, the GST Council decided to impose tax on the entire value.
It’s important to note that this tax will be imposed on online gaming companies regardless of whether the games they offer are based on skill or chance. This change is set to significantly impact the online gaming industry in India and will be keenly watched by both companies and consumers alike.