In a significant development, the Lok Sabha has given its approval for the amendments to the Central and Integrated GST laws, which entail the imposition of a 28% Goods and Services Tax (GST) on the full face value of bets related to online gaming, casinos, and horse race clubs.
Finance Minister Introduces Bills in Monsoon Session
Finance Minister Nirmala Sitharaman introduced these bills on the final day of the Monsoon Session in the Lok Sabha. The Central Goods and Services Tax (Amendment) Bill, 2023, and The Integrated Goods and Services Tax (Amendment) Bill, 2023, had already received the green light from the GST council in the previous week.
State Assemblies’ Role in the Amendment
The approved amendments now require state assemblies to pass similar changes to their respective GST laws. These amendments primarily concern the insertion of provisions in Schedule III of the CGST Act, 2017, with the aim of providing clarity regarding the taxation of supplies in casinos, horse racing, and online gaming.
Expansion of GST Liability for Offshore Entities
The IGST Act is undergoing a crucial amendment. This change introduces a provision to impose GST liability on offshore entities offering online money gaming. These entities must now get GST registration in India. This step ensures effective enforcement of the newly introduced tax rules by the government.
Impact on Gaming Startups and GST Council’s Review
The introduction of the 28% GST on entry-level payments for online gaming had an immediate impact on the industry. Mobile Premier League (MPL) and Hike, prominent gaming startups, both announced workforce reductions due to increased tax burdens. The Council, recognizing the implications, has decided to review the decision to levy 28% tax on real-money gaming after a period of six months, potentially leading to further adjustments in the taxation structure.
The Lok Sabha’s action and the following enforcement of amendments will reshape online gaming, casino, and horse racing taxation. It will push gaming startups to adjust to the new tax scenario.
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