The GST Council held its 50th meeting on July 11, 2023. It passed an important decision for the online gaming industry, casinos and the horse racing businesses. The GST Council, with the help of the Group of Ministers, made recommendations on imposing GST on online gaming. This decision put an end to the debate over games of skill or chance. 28% GST shall apply to online gaming, casinos and horse racing on the full face value. To include this under its scope, lawmakers must amend the GST law.
The decision of a 28% GST on both skill-based and chance-based online games has resulted in a remarkable 412% increase in tax revenue. This rate applies to all online gambling activities from October 2023, including fantasy sports, casinos, as well as other forms of online gambling.
Also, the final report of GoM or Group of Ministers had proposed a levy of 28% GST on the total value of the consideration received in online gaming. This includes the entry fee. The council proposed a 28% GST on the initial purchase of casino chips. Casinos will not apply GST again on new bets made from previous winnings. Earlier, authorities taxed skill-based games at 18%. Experts expect the online gaming industry to keep growing under the new GST rate. India now ranks as the world’s second-largest gaming market with about 442 million gamers.
They elaborate on the current applicability of GST on online gaming and casinos. They also analyze the implications of the proposed changes if implemented.
First, understand the current GST treatment for online gaming and casinos to better understand the impact of the proposed changes.
Today, the GST regime differentiates online games based on skills versus chance. The GST Council recommended charging 28% GST on the full face value at its 50th meeting. Lawmakers will soon revise the GST law to include online gaming under its scope. Currently, it falls under actionable claims.
