GoM can recommend 28% GST for online gaming; Board takes final decision on valuation

The panel of state finance ministers is likely to recommend a 28 percent GST levy on online gaming, whether it’s a game of skill or chance, and may leave the final decision on the thorny question of valuation to the GST advice, sources said.

The group of ministers, chaired by Meghalaya Chief Minister Conrad Sangma, had a virtual meeting on Tuesday to finalize their long-awaited report on taxation of online gambling, casinos and horse racing.

According to the sources, a majority of state ministers in the GoM believed that the Goods and Services Tax (GST) on online gambling should be increased to 28 percent. In the absence of consensus on whether the tax should be levied only on the fees charged by the portal or on the full consideration, including the stake amount, received from participants, the GoM has decided to follow through on all suggestions. refer to GST Council for final decision. decision.

Currently, online gaming attracts 18 percent GST. The tax is levied on the gross gambling income, which is the costs charged by online gambling portals.

The sources said there would be no further deliberations at the GoM level and the report would now be submitted to the GST board for consideration. GST Council, chaired by the Union Treasury Secretary and made up of its state counterparts, is the highest decision-making body for GST-related matters.

The GoM, in its earlier report submitted to the Council in June, had proposed a 28 percent GST on the full value of the consideration, including the match entry fee, paid by the player, without making any distinction between games of skill or chance . However, the Council had asked GoM to reconsider its report.

After that, the GoM took the Attorney General’s positions and also met with stakeholders from the online gaming industry.

Although the GoM deliberated on separate definitions for “games of skill” and “games of chance,” it ultimately decided to tax both as criminal goods paying 28 percent GST.

The message must be clear that online gaming is a criminal offence. However, some easing in valuation methods could be offered, the sources told PTI.

The June GoM report suggested that the GST should be levied on the entire amount received in return from the participant.

The industry experts had said charging 28 percent GST on the total amount a player deposits for a game for both categories of online games would reduce the prize money left for distribution and drive players away from legitimate portals for tax deductions. This can also lead online gamers to illegitimate portals that do not deduct taxes.

Online gaming witnessed a spurt during the Covid lockdown, with the number of users in India increasing significantly. According to a KPMG report, the online gaming sector is projected to grow from Rs 13,600 crore in 2024-2025 to Rs 29,000 crore in 2021.

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