India has implemented a 28 percent Goods and Services Tax (GST) rate on online gaming starting from Sunday, October 1.
New Delhi: The Central Board of Indirect Taxes and Customs (CBIC) will implement a 28 percent Goods and Services Tax (GST) rate on online gaming starting from Sunday, October 1st. This decision has been unanimously agreed upon by all Indian states and follows the recent approval of amendments to GST laws in the Lok Sabha. CBIC Chairman Sanjay Agarwal stated that the Board is ready to implement the 28 percent GST rate on online gaming. “We are ready to implement a 28 per cent GST rate on online gaming from October 1 with the consent of all the states. The law for GST rate on online gaming will have to be passed by the assembly of states. Show cause notices to some online gaming companies are legal process,” Agarwal said.
GST On Online Gaming: Lok Sabha Passed Amendments On GST Laws
The Lok Sabha during its final session of the monsoon season, passed amendments to two GST laws on August 11 with both a voice vote and minimal debate. The amendments were related to the Central Goods and Services Tax (Amendment) Bill, 2023, and the Integrated Goods and Services Tax (Amendment) Bill, 2023.
GST On Online Gaming: Aim Of amendments On GST Laws
The prime focus of these two legislative changes is to implement 28 percent GST for online gaming, casinos, and horse racing. This legislative action aligns with GST Council’s decision during its 51st meeting on August 2. The Council had decided to accelerate the process of amending the pertinent Acts required for the imposition of taxes on online gaming, casinos, and horse racing.
GST On Online Gaming: Clarity Regarding Taxation, Says Centre
According to the Central Government these amendments will play a key role in providing much-needed clarity related to the taxation of supplies in casinos, horse racing, and online gaming. To ensure adherence, the GST Council has proposed the inclusion of specific provisions in the IGST Act of 2017.
GST On Online Gaming: GST On Gaming Money
These provisions pertain to the responsibility for paying GST on the provision of online money gaming services by foreign suppliers to Indian customers, as well as measures to block access to relevant information in the event of non-compliance.
Moreover, the GST Council has recommended that the valuation of online gaming and actionable claims in casinos should be determined based on the amount paid or payable to the supplier, either by the player directly or on the player’s behalf. This approach does not include the amounts used in previous winnings or wagers. This valuation method is intended to offer clarity and uniformity in the taxation of these sectors.
It is worth noting that, Council had previously recommended in its 50th meeting in July this year to implement a 28 percent GST rate on the full face value for Casinos, Horse Racing, and Online Gaming.
GST On Online Gaming: Broader Efforts To Bring Various Sectors Under GST Framework
This rate is applicable regardless of whether these activities encompass games of skill or chance. The recent revisions to the GST laws are intended to establish a consistent taxation structure for these sectors and address any remaining uncertainties.
India’s decision to tax online gaming is a component of broader initiatives aimed at encompassing various sectors within the GST framework and enhancing tax collection procedures.