GST Council Meet Outcome: 28% GST on online gaming to become effective from October 1, says FM Sitharaman

GST Council meeting: Finance Minister Nirmala Sitharaman informed on Wednesday on the sidelines of the GST Council Meeting that the 28 per cent GST levied on online gaming will become effective from October 1, even though there was a demand from states to review the decision. She informed that states like Delhi, Goa and Sikkim had sought review of the 28 per cent online gaming tax that had been decided earlier. 

She said that Delhi finance minister opposed the levy of the online gaming tax, while Goa and Sikkim wanted the levy on GGR (gross gaming revenue) and not on face value.

However, states like Karnataka, Gujarat, Maharasthra and Uttar Pradesh wanted the decision taken at the last GST Council meeting to be implemented, she added.

The new levy, after required changes are made in the central and state laws, is likely to come into effect from October 1, she said, adding that there would be a review of the levy after six months of its implementation.

GST on gaming: Clause explained by FM

The FM said that for the purpose of GST levy, the valuation of supply of online gaming and casinos will be done based on the amount paid or deposited with the supplier, excluding the winning amount in the bet.

"The valuation may be done based on the amount paid or payable or deposited with the supplier by or on behalf of the player, excluding the amount entered into games bets out of winnings of previous games and bets and not on the total value of each bets placed. Entry (level) whatever they pay to get chips and not what they pay in each game," Sitharaman said.

As an example, the finance minister said that suppose a bet is placed for Rs 1,000, and the player wins Rs 300.

Then if the player again places a bet of Rs 1,300, then GST will not be levied on the winning amount.

GST Council meeting outcome: Offshore gaming platforms will have to register

Revenue secretary Sanjay Malhotra said that offshore gaming platforms will have to register themselves with the GST authorities.

In case they do not follow the law, the government will invoke the provisions of the Information Technology Act to block those sites, Malhotra added.

Malhotra said the amendments will specifically define online gaming, online money gaming, virtual digital assets used to pay for online games, and supplier in case of online gaming.

When asked about the impact on the ongoing legal cases in case of online gaming, Malhotra said the decision of the GST Council is only clarificatory in nature as online gaming was always an actionable claim in the nature of betting and gambling on which 28 per cent GST is leviable.

The GST Council had in its last meeting decided to levy a 28 per cent GST on full face value of bets placed and Wednesday's meeting was to deliberate on the tax law changes that would be required to implement it.

The GST Council -- the highest decision making body of the new indirect tax regime that comprises Union finance minister and representatives of all states -- discussed the language of amendments that will be needed to enabling taxing online gaming, she said after the panel meeting.
 

(With agency nputs)