(Source: ECI/ABP News/ABP Majha)
Online Gaming Tax: GST Council Said To Meet On August 2 Over Gaming, Casino, Horse Racing
The proposed changes in the GST law and rules, based on the earlier decision of the Council, will be submitted for consideration.
The Goods and Services Tax (GST) Council is expected to convene via videoconferencing on August 2 to make a final decision on imposing a 28 per cent GST on online gaming, casinos, and horse racing, as per media reports based on source inputs. Despite assurances from officials that there will be no backtracking on the proposal, certain aspects, such as whether the 28 per cent GST levy should apply to the entry value or each bet, will be addressed during the meeting.
A senior government official reportedly confirmed that the details pertaining to the required legal amendment and rule adjustments will be presented for the Council's approval. The proposed changes in the GST law and rules, based on the earlier decision of the Council, will be submitted for consideration.
The legal amendment will outline specific details, including the rate and the methodology for calculating the 28 per cent GST on online gaming, casinos, and horse racing.
In its decision on July 11, the GST Council resolved to levy a uniform 28 per cent tax on the full face value for these sectors. To facilitate this implementation, a legal amendment was expected to be introduced in the monsoon session of Parliament, which would include online gaming and horse racing under the category of actionable claim and enable their taxation without distinguishing between games of skill or chance.
While the government maintains that the decision is not intended to harm any industry, online gaming companies have expressed concerns about its potential impact on their businesses, as it may adversely affect volumes and overall viability.
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Under the uniform levy of 28 per cent, the tax will be applicable to the face value of chips purchased in casinos, the full value of bets placed with bookmakers or totalisators in horse racing, and the full value of bets placed in online gaming. An alternate option of taxing the gross gaming revenue or platform fee, which is the charge paid to access gaming services, was also discussed but was not favoured.
Several investors, including Tiger Global, Peak XV, and Steadview Capital, have written to the Prime Minister, seeking a review of the 28 per cent GST on online gaming, emphasising that this decision could negatively impact potential investments of $4 billion in the sector.
Likewise, more than a hundred industry associations representing major gaming companies, including Dream11 and Mobile Premier League, also expressed their concerns in an open letter to the government, stating that the tax decision has placed the industry in significant distress and could have devastating implications for the companies, even leading to business closures.