The GST Council has made a decisive move to levy 28% GST on real-money gaming, a decision that will take effect from October 1. The Council further revealed that a review of the implementation’s impact will be conducted six months after it comes into effect. This decision was reached during the Council’s meeting on August 2.
Finance Minister Sitharaman Announces Implementation Date
Finance Minister Nirmala Sitharaman disclosed during a press conference that the GST Act amendment for the 28% GST levy to address in the ongoing Monsoon Session of the Parliament. The Finance Minister mentioned that the implementation of the 28% GST expects to be on October 1, 2023.
GST Council- Clarifications on GST Application for Online Gaming
Minister Sitharaman clarified that the 28% GST rate applies to the amount paid at the entry level for online gaming. The Council recommended valuing the supply of online gaming and actionable claims in casinos based on the amount paid or payable to the supplier. Certain elements like previous game winnings and the total value of each bet placed excluds from this valuation.
Amendments in CGST Act and IGST Act
The GST Council also suggested specific amendments in the CGST Act 2017 and IGST Act 2017 to provide clarity on the taxation of supplies in casinos, horse racing, and online gaming. These amendments aim to bring further transparency and understanding to the taxation framework for these sectors.
Industry Reactions to the GST Council Decision
Last month, the GST Council decided to impose 28% GST on online real-money gaming. Industry stakeholders strongly criticized this move, leading gaming startups, industry bodies, and investors to request a reconsideration.
Despite the concerns raised, the Council maintained its stance on the GST rate for online gaming.
The E-Gaming Federation (EGF) and the Federation of Indian Fantasy Sports (FIFS) responded to the Council’s clarifications with a joint statement. They appreciated the clarity but expressed concern over the significant increase in GST. They believe it could hinder the growth and development of the Indian online gaming industry.
The All India Gaming Federation (AIGF) expressed its belief that the Council’s decision on deposit valuation would severely impact the online gaming sector, especially startups and MSMEs. The industry body warned that many players might struggle to survive due to the substantial increase in tax liability. This, in turn, poses potential challenges to their revenue and valuation prospects.
