The virtual meeting of the GST Council scheduled for August 2 is set to address the issue of levying a 28% tax on online gaming, casinos, and horse racing. Chaired by Union Finance Minister Nirmala Sitharaman, the meeting is critical for stakeholders in the online gaming business, as they have raised concerns over the potential impact on startups and gamers.
In the previous meeting, the GST Council decided to impose a uniform 28% tax on the full face value of bets in online gaming, casinos, and horse racing. However, big online gaming companies and their CEOs have urged the government to reconsider this decision, fearing it may hamper the growth of new-age startups.
The Group of Ministers (GoM) will now deliberate on the proposal and make a final decision regarding the 28% GST on online gaming, casinos, and horse racing during the upcoming meeting. The GoM will discuss the recommendations put forth by the Law Committee, comprising Centre and state tax officers, which has prepared draft rules for the computation of supply value for tax purposes.
The committee has proposed a new rule that the value of supply for online gaming would be the total amount deposited with the gaming platforms on behalf of the player, whether in the form of money or virtual digital assets. For casinos, the supply value would be the amount paid by a player for tokens, chips, coins, or tickets.
The All India Gaming Federation (AIGF), representing companies like Nazara, GamesKraft, Zupee, and Winzo, has criticized the decision by the GST Council, deeming it “unconstitutional, irrational, and egregious.” Additionally, gamers from Tier II and Tier III cities, under the banner of ‘Indian Gamers United,’ have voiced concerns about high taxation driving gamers to illegal offshore platforms.
The association has urged the government to differentiate between games of skill and games of chance, arguing that gaming is a skill-based activity and should not be treated the same as gambling and horse racing.
In the upcoming meeting, the GST Council is also expected to approve a clear definition of actionable claims and include online money gaming within the definition of online gaming. Furthermore, a definition of “virtual digital asset” as defined under the IT Act may be inserted in the GST Law.
The meeting holds significant importance for the online gaming industry and the gaming community, as the decisions made will have far-reaching implications on their operations and the sector’s overall growth.
