Online Gaming: Online gaming market may be in danger due to this decision of GST Council

The GST Council on Tuesday approved a uniform 28 per cent tax on the MRP of online gaming, casino and betting on horse racing. This would bring them on par with betting and gambling. Industry stakeholders were arguing that games of skill should be treated differently from games of chance for tax purposes. This decision of the GST Council is being considered as a big blow to the growing online gaming market and its popularity in India. According to a survey, the size of the gaming market in India is expected to grow from US$ 3,020.24 million in 2023 to US$ 6,256.52 million by 2028.

The council also decided to reduce the service tax levied on food and beverages consumed in cinema halls from 18 per cent to 5 per cent, and change the definition of sports utility vehicle (SUV) to attract cess over and above the GST rate. Have done The effective tax rate on online gaming will be implemented post amendment in the GST law. “GST law will be amended to include online gaming and (it) will be taxed at 28 per cent on full value,” Finance Minister Nirmala Sitharaman said here.

Currently, most online gaming platforms pay an 18 per cent tax on the commission collected for each game. Those involved in betting or gambling attract 28 per cent GST. GST is levied at 28 per cent on the bet value for horse racing. Explaining the taxability, the finance ministry said: “The said levy will be applicable on the face value of chips purchased in case of casino, on full value of bets placed with bookie/totalizer in case of racing.” It added that suitable amendments will be made in the law to include online gaming and horse racing in Schedule III as taxable actionable claims.