GST Council meeting: 28% tax on casinos, online gaming to come into effect from October 1 and other key takeaways

Finance Minister Nirmala Sitharaman chaired the 51st meeting of the Goods and Services Tax (GST) Council on August 2 in Delhi. The highest decision making body regarding the GST tax regime, which includes the finance ministers of all states, discussed issues related to the tax levied on horse racing, online gaming and casinos.

After the meeting the government announced that the 28 per cent GST on online gaming would come into effect from October 1.

Here are the key takeaways from the GST Council meeting.

28 per cent GST on online gaming

A GST of 28 per cent on the full face value of bets put on online gaming will be levied from October 1. Finance Minister Nirmala Sitharaman announced that the GST Council will review the implementation six months after the date.

“The council recommended that valuation of supply on online gaming and actionable claims in casinos may be done based on the amount paid or payable or payable to or deposited with the supplier by/or on behalf of the player, excluding the amount entered into the games, bets out of winnings of previous games and not on the total value of each bet placed.”, the minister said after the council meeting.

Efforts will be made by the government to bring amendments in the GST Act at the earliest so that the changes can be implemented from October 1.

Amendments in CGST and IGST Act 2017

The GST Council recommended some amendments in the IGST and CGST Act, 2017, to provide clarity regarding the taxation of supplies in horse racing, casinos, and online gaming. The addition of a specific provision in IGST Act, 2017, was recommended to provide for liability to pay tax on the supply of online money gaming to a person in India by a supplier located outside the country. The provision also calls for single registration in the country for the supplier through a simplified scheme, and for blocking access by the public to any information hosted, generated or transmitted in any computer resource for supply of online money gaming by any broker in case of failure to comply with the tax registration and payment provisions.

GST Council on valuation of supply of online gaming

The valuation of actionable claims in casinos and supply of online gaming can be done on the basis not on the total value of each bet placed, but the amount payable to or deposited with the supplier, the GST Council recommended. This excludes the money entered into bets/ games from the previous games/ bets’ winnings. The council advocated that the CGST Rules 2017 must be amended to insert provisions accordingly. The GST Council also recommended issuance of notifications in relation to the issue.