GST Council Imposes 28% Tax on Online Gaming Bets, Effective from October 1st

GST Council Imposes 28% Tax on Online Gaming Bets, Effective from October 1st
GST Council Imposes 28% Tax on Online Gaming Bets, Effective from October 1st

In a significant development, the 51st meeting of the Goods and Services Tax (GST) Council has introduced a transformative change by instituting a 28% tax on the entire nominal value of bets placed in the realm of online gaming. The implementation of this tax is scheduled to commence on October 1st. Notably, this decision was formally communicated by India’s esteemed Finance Minister, Nirmala Sitharaman.

The primary objective behind this decision is to usher in clarity and coherence in the taxation landscape encompassing casinos, horse racing, and the burgeoning domain of online gaming. This taxation revision is accompanied by a strategic recommendation for amendments in both the CGST Act 2017 and the IGST Act 2017, which will serve as the cornerstone for the successful execution of this policy shift.

Furthermore, the GST Council has advocated for an additional insertion in the IGST Act, 2017. This specific provision is designed to specifically address the tax liability pertaining to the supply of online money gaming services originating from foreign suppliers to individuals within the geographical confines of India.

In a move to standardize the valuation process and ensure a systematic taxation framework, the GST Council has prescribed a comprehensive guideline for the valuation of supply within the realm of online gaming and actionable claims within casinos. The crux of this guideline entails the calculation of taxable value based on the actual amount paid or payable by the player to the supplier. This calculation excludes any sum that might be attributed to prior winnings, ensuring a fair and equitable assessment.

While the decision has garnered a mix of opinions from different states, with Delhi expressing opposition and states like Goa and Sikkim advocating for an alternate tax approach based on Gross Gaming Revenue (GGR), the GST Council stands by its resolution. Notably, states including Karnataka, Gujarat, Maharashtra, and Uttar Pradesh have offered their support to the decision made during the preceding GST Council meeting, endorsing the introduction of this novel levy.

The GST Council, a constitutional entity entrusted with shaping the landscape of Goods and Services Tax (GST) in India, convened its inaugural session in September 2016. Since its establishment, it has been instrumental in orchestrating critical decisions surrounding GST-related matters. As delineated in Article 279A (1) of the amended Constitution, the President is mandated to constitute the GST Council within 60 days of Article 279A’s initiation. Guided by this constitutional mandate, the GST Council has emerged as a pivotal force, steering significant decisions concerning GST tax rates, exemptions, thresholds, and administrative protocols.

Notably, the Goods and Services Tax (GST) was inaugurated by former Indian President Ram Nath Kovind on July 1, 2017, marking a historic transformation in the nation’s taxation framework.