GST on online gaming to be raised to 28%

The Goods and Services Tax (GST) Council may raise the tax rates for online gaming to 28%, to discourage games involving gambling and betting. Currently, online gaming is taxed at 18% of the platform fee, but chance gaming such as racing, betting and lotteries are taxed at 28% of the contest entry amount.

The taxation base will be decided by the group of ministers (GoM) in two weeks after considering the report of a committee of officers. The final decision on the change in tax will be taken by the GST Council after considering the GoM recommendations.

West Bengal Finance Minister Chandrima Bhattacharya, a member of the GoM, said, “There should be no difference between skill gaming and chance gaming. These activities have a direct adverse impact on the society at large by pushing children towards gambling.”

Meghalaya Chief Minister Conrad Sangma, convener of the GoM, said that online gaming is a booming industry with an annual turnover of Rs 30,000 crore and growing by 20-30%/annum. “We have to keep in mind the society, the Centre, the state governments as well as the industries in mind before taking a decision,” he added.

According to industry body Indiatech: “Rule 31A of CGST Rules 2017 reads as the value of supply of actionable claim in the form of chance to win in betting, gambling or horse racing in a race club shall be 100% of the face value of the bet or the amount paid into the totalisator. Thus, it can be construed that Rule 31A strictly applies to games involving betting, gambling or horse racing, etc. Since Rule 31A uses the word ‘chance’ before describing the activity it is clear that the Rule does not apply to online games based of skill.”