GST Council Imposes 28% Tax on Revenue of Online Gaming Companies
The Goods and Services Tax (GST) Council, led by Union Finance Minister Nirmala Sitharaman, has announced that online gaming companies will now be subject to a 28% indirect tax on their turnover. This decision was made during the council’s 50th meeting, where state finance ministers also discussed the taxation of casinos, horse racing, and online gaming.
It has previously been unable to decide whether to impose the 28% GST on the face value of bets, gross gaming revenue or just platform fees.
West Bengal Finance Minister Chandrima Bhattacharya said, “The GST Council has decided that online gaming, casinos and horse racing will be taxed at 28% of the full face value of bets,” he told reporters here.
Maharashtra’s Forest Culture and Fisheries Minister Sudhir Mungantiwar said the tax on online gaming companies would be levied without distinguishing whether the games required skill or were based on chance.
The Minister said that amendments will be made to the GST Act to ensure that these three supplies are not actionable claims like lotteries and betting.
Mungantiwar said the council has decided to remove the distinction between skill and chance in online gaming.
A tax of 28 percent would be levied on the full face value of bets, Mungantiwar said.
The move will be a major setback for foreign investors such as Tiger Global and Sequoia Capital, which have invested heavily in fantasy cricket ventures such as Dream11 and Mobile Premier League.
The gaming industry is reacting
“This means that GST will be applied on gross receipts/total prize pool,” Reuters quoted All India Gaming Federation CEO Roland Landers as saying.
“We believe that this decision of the GST Council is unconstitutional, irrational and outrageous,” he added.
With contributions from agencies.
