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Parliament clears Bill for 28% GST on e-gaming
The amendments make it mandatory for offshore gaming
firms to be registered in India in order to give a
level-playing field to domestic firms.
Both houses of Parliament
on Friday passed the amendments to the Goods and
Services Tax (GST) laws, without a debate, to impose 28%
GST on full face value in online money gaming and casino
and horse racing, from October 1.
The amendments, approved on the last working day of the
session, also make it mandatory for offshore gaming
firms to be registered in India in order to give a
level-playing field to domestic firms.
The amendments to the Central Goods and Services Tax Act
and the Integrated Goods and Services Tax Act bring an
end to the three years of debate on the tax rate and the
tax base on online gaming, casinos and horse racing.
Casinos are currently paying 28% GST on Gross Gaming
Revenue (platform fees). The online gaming industry
supplying actionable claims and some horse race clubs
are currently paying GST at 18% on platform
fees/commissions ranging from 5-20% of the full-face
value while some horse race clubs are paying 28% on the
full-face value.
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The Group of Ministers on Casinos, Race Courses and
Online Gaming constituted by the GST Council, held
extensive stakeholder consultations and examined the
issue in detail which were mentioned in its reports
submitted to the GST Council.
In FY23, the Centre collected Rs 1,700 crore GST from
online gaming, Rs 300 crore from casinos and Rs 80 crore
from horse racing activities. In other words, GST
receipts from the burgeoning online gaming industry
fetched barely 2% of its estimated turnover of Rs 85,000
crore in FY23.
In its 50th meeting, the Council finally decided to
impose GST at 28% on online gaming, the highest slab, a
move that rattled the industry. Following representation
from the industry, the Council, in its 51st meeting,
decided to exempt redeployment of the winnings from
online gaming from the 28% tax, in a significant
relaxation for the fast-growing gaming industry.
The CGST Act now defines “online money gaming” as one in
which “players pay or deposit money or money’s worth,
including virtual digital assets, in the expectation of
winning money or money’s worth, including virtual
digital assets, in any event, including game, scheme,
competition or any other activity or process, whether or
not its outcome or performance is based on skill, chance
or both, and whether the same is permissible or
otherwise under any other law for the time being in
force.
”The amendments do not affect the tax on casual online
gaming in which no real money or betting or wager is
involved.
Registration under GST is being made mandatory for a
person supplying online money gaming, from a place
outside India to a person in India. A special provision
to provide for tax liability on overseas suppliers of
online money gaming and for simplified GST registration
for such suppliers as well as powers for blocking
websites/platforms of non-compliant suppliers has been
included in the IGST Act.
“There’s no effect of the amendments on the start-up
ecosystem in India, as it brings parity between
international entities & domestic ones,” a finance
ministry official said.
By defining what constitutes online gaming, who is
liable to pay GST, and how the GST will be calculated,
the amendments would help eliminate uncertainty and
ambiguity, Saurabh Agarwal, Tax Partner, EY, said.
“However, one issue that remains unresolved is whether
the deposit of money in an online gaming wallet
constitutes a supply. This issue will likely be subject
to interpretation in time,” Agarwal said.
Source::: FINANCIAL EXPRESS ,
dated 12/08/2023.
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