GST Council Agrees To Tax Online Gaming At 28%

The levy will be applicable on the entire bet value on a platform.

Representational Image (Photo by Sean Do on Unsplash)

The GST Council, in its 50th meeting on Tuesday, agreed to levy a 28% tax on online gaming, casinos, and horse racing, West Bengal Finance Minister Chandrima Bhattacharya said. The goods and services tax is likely to be levied on the full face value, which is the total value of bets placed on a platform.

Maharashtra Minister Sudhir Mungantiwar said there would be no differentiation between games of skill or chance for the taxation of online games.

This decision by the GST Council is unconstitutional, irrational, and egregious, Roland Landers, chief executive officer of The All India Gaming Federation, said in a media statement. "The decision ignores over 60 years of settled legal jurisprudence and lumps online gaming with gambling activities."

This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses, and the only people benefitting from this will be anti-national illegal offshore platforms, Landers said.

The group of ministers' report, convened by Meghalaya Chief Minister Conrad Sangma, had suggested that a 28% GST should be levied on all three activities. But the GoM couldn't reach a consensus on what value this 28% should be applied to, leaving the final decision to the GST Council.

Even as the issue was being deliberated at the GoM and council level, a high-stakes case against Gameskraft Technologies Pvt., involving a demand of Rs 21,000 crore, reached the Karnataka High Court.

At the heart of it, the GST department had made two arguments—rummy is a game of chance, which amounts to gambling. So it should attract a 28% tax. And two, the tax should be levied on the gross amount of transactions or the entire bet value undertaken on the platform.

Against this, Gameskraft stated that rummy is a game of skill. So the tax rate should be 18%. And it should be levied on revenue earned by it in the form of a facilitation fee. The high court agreed with the company's argument that rummy is a game of skill, which should attract an 18% levy.

Most recently, Union Finance Minister Nirmala Sitharaman assured the industry that both the GST Council and the Ministry of Electronics and IT are working towards a clearer tax and regulatory policy for the gaming sector.

Also Read: Online Gaming Rules: Experts Call for Clarity On Wagering, Harm

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WRITTEN BY
Charu Singh
Charu Singh, a correspondent at NDTV Profit, leverages her legal education ... more
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