New Delhi: Online gaming enthusiasts will have to pay more from October 1, 2023, as the Finance Ministry has notified the date for the implementation of the revised provisions of the GST law for e-gaming, casino, and horse racing. These activities will now be considered as ‘actionable claims’ similar to lottery, betting, and gambling and will attract 28 percent GST on the full face value of the bets.
The notification was issued late on Friday night by the Finance Ministry, following the approval of the GST Council, which comprises finance ministers of the Centre and states, in its meetings in July and August. The Council had decided to amend the Central GST (CGST) and Integrated GST (IGST) laws to bring online gaming, casino, and horse racing under the ambit of GST and clarify that tax on such supplies will be levied on the entire stake value.
The Parliament passed the amendments to the CGST and IGST laws last month to give effect to the Council’s decision. According to the changes in the CGST Act, online gaming, casino, and horse racing will be treated as ‘actionable claims’ on par with lotteries, betting, and gambling and will be subject to 28 percent GST on the full face value of the bets.
This means that if a person bets Rs 100 on an online game a casino game or a horse race, he or she will have to pay Rs 28 as GST, irrespective of whether he or she wins or loses. Earlier, there was no clarity on how to tax such activities and different states had different rules and rates.
According to the amendments in the IGST law, it will be mandatory for foreign online gaming platforms to register in India and pay tax as per domestic law. The amendment in the IGST Act has made it compulsory for offshore online gaming platforms to register in India and pay 28 percent tax as per domestic law.
This means that foreign online gaming platforms that offer services to Indian customers will have to comply with Indian tax laws and pay GST on their revenues from India. Earlier, there was no provision to tax such platforms under IGST law and they could operate without paying any tax in India.
The notification of the Finance Ministry has created confusion among e-gaming companies, as many states have not yet passed amendments to their respective state SGST laws. The e-gaming companies said that this notification of the Central Government will create inconsistency in the CGST and IGST laws and lead to legal disputes.
They also said that the high tax rate of 28 percent will adversely affect their business and discourage customers from playing online games. They urged the government to reconsider its decision and lower the tax rate for online gaming.