Article

New 28% GST on Online Gaming in India: What You Need to Know

date 29  September,  2023
time 2 mins read

A Major Shift in the Gaming Sector Starting from October 1, online gaming in India will significantly change its taxation structure. The Central Board of Indirect Taxes and Customs (CBIC) has announced the imposition of a 28% Goods and Services Tax (GST) on online gaming, following recent changes to the GST regulations.

Amendments Passed by Lok Sabha

On August 11, in its final monsoon session, the Lok Sabha smoothly passed amendments to two pivotal GST laws: the Integrated Goods and Services Tax (Amendment) Bill, 2023, and the Central Goods and Services Tax (Amendment) Bill, 2023. These modifications primarily aim to incorporate a 28% GST rate on online gaming, casinos, and horse racing.

Reason for this Change

The central government believes these changes will bring much-needed transparency and clarity in the taxation process concerning supplies in casinos, horse racing, and online gaming. The Goods and Services Tax (GST) Council, in its 51st meeting on August 2, resolved to fast-track the necessary legislative amendments.

Key Provisions Introduced 

To ensure strict adherence to these new tax rules, the GST Council has recommended the addition of certain provisions in the IGST Act, 2017. These crucial provisions will oversee the liability to pay GST on the supply of online money gaming from overseas suppliers to Indian consumers. They also address the necessary steps to block access to related information in instances of non-compliance.

How Will Gaming Transactions Be Taxed? 

It’s essential to understand the valuation method introduced. The GST Council suggests that the valuation of online gaming and actionable claims in casinos should focus on the amount either paid or payable to the provider by or on behalf of the player. Importantly, this valuation won’t include the sum placed in games or bets using prior winnings.

Uniform Taxation Framework

During its 50th meeting on July 11, the GST Council had already suggested a 28% GST rate on the full-face value for Casinos, Horse Racing, and Online Gaming. This rate would stand regardless of the nature of these activities, whether skill-based or chance-based. The recent GST law amendments aim to introduce a consistent tax framework for these sectors and clear any previous ambiguities.

Conclusion

With these changes on the horizon, the online gaming sector in India is about to experience a paradigm shift. Stakeholders, players, and suppliers need to stay informed and adapt to these new tax structures, ensuring compliance and understanding the broader implications of this revised GST framework.

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