Cabinet clears changes to GST laws to levy 28% GST on online gaming, casinos, horse race clubs

The Union Cabinet on Wednesday approved changes to GST laws to levy a 28 per cent tax on the full face value of bets in online gaming, casinos and horse race clubs, sources said.

The amendments to the Central GST (CGST) and Integrated GST (IGST) acts, which were approved by the GST Council last week, are likely to be introduced in the ongoing monsoon session of Parliament, which will end on August 11.

The GST Council in its 51st meeting on August 2 recommended amendments to the Schedule III of the CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing and online gaming.

The Council also recommended inserting a provision in the IGST Act, 2017, to impose GST liability on online money gaming provided by offshore entities. Such entities would be required to get GST registration in India.

The amendments will also provide for blocking access to online gaming platforms located overseas in case of failure to comply with registration and tax payment provisions.

The amended provisions in the GST laws -- which would specifically define online gaming, online money gaming, virtual digital assets used to pay for online games and suppliers in case of online gaming -- will be effective from October 1.

Sources said the Union Cabinet in its meeting on Wednesday has cleared the amendments to CGST and IGST laws. The Council, the highest decision-making body of the new indirect tax regime that comprises the Union finance minister and representatives of all states, on August 2 decided that 28 per cent Goods and Services Tax (GST) will be levied at the face value of entry-level bets placed in gaming platforms and casinos.

Finance Minister Nirmala Sitharaman, after the Council meeting, had said that the CGST and IGST amendments are expected to be introduced in the monsoon session of Parliament. States will pass amendments to the State GST law in their respective assemblies.

The online gaming industry and some horse racing clubs are currently paying GST at the rate of 18 per cent on platform fees/commission ranging from 5 to 20 per cent of the full face value, while some horse race clubs are paying 28 per cent on the full face value.

They are disputing the 28 per cent levy on actionable claims in the form of betting and gambling before various legal fora. Casinos too are currently paying 28 per cent GST on Gross Gaming Revenue (GGR). Levying 28 per cent GST on the full face face value of entry-level bets would result in increased GST revenues.

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