28% GST to be levied on online gaming, horse racing and casinos
As per news reports, Finance Minister Nirmala Sitharaman stated that Group of Ministers (GoM) reached a consensus over levying 28% GST on full value of online gaming, horse racing and casinos. This will be applicable with distinction made between games of skill and chance.
Jay Sayta, Technology & Gaming Lawyer shared: “The decision of the GST Council to obliterate the distinction between games of skill and chance and impose a flat 28% tax on face value of transaction or entry fees of online gaming, casinos and horse racing will have a massive impact on the industry. Having said that, since it has been decided by the GST Council that amendments have to be made to Entry 6 of Schedule III of the CGST Act to exclude online skill-based gaming from the ambit of actionable claims and correspondingly all 28 states will have to amend their state GST laws to reflect this position, it will take at least 5-6 months to bring into force this changed rate and manner of valuation of taxation for online skill gaming industry.
It is also almost certain that the industry will be challenging these amendments to the GST laws, as and when they are brought into force in the courts on constitutional grounds. The industry will also likely be seeking interim relief from courts as and when the law is brought into force.”
Nitish Mittersain– Founder of Nazara Technologies Limited presented his thoughts on the latest decision by the Indian government regarding the tax rate on online gaming.
Sharing our intimation to stock exchanges earlier today on impact of #gst announcement related to online gaming.
— Nitish Mittersain (@mittersain) July 12, 2023
Gaurav Kapoor, Chief Financial Officer, Baazi Games shared his thoughts on the 28% GST tax rate for online gaming, horse racing and casinos. He states:
“Online Gaming is currently growing at an exponential rate in India. The increasing interest of the Central Government in implementing policies to shape growth while bringing transparency in the segment is a testament towards the potential of the sector.
The announcement of levying 28% GST tax rate on the face value is a decision in the reverse direction and will lead to a stunted growth, revenues and investments into the Online Gaming Industry. This development will spur growth in offshore companies and the users increasingly opting to play on illegal platforms. Which will lead to job-losses and making Indian companies de-grow from the current levels. The decision will further negate from the Hon’ble Prime Minister’s vision of Digital India and making India the global gaming hub.
We urge the government to re-evaluate the decision to make it inline with the international practice of taxing the Gross Gaming Revenue of the Online Gaming Intermediaries (OGIs).”
Roland Landers, CEO – The All India Gaming Federation states the following on the 28% GST on online gaming, horse racing and casinos:
“We believe this decision by the GST Council is unconstitutional, irrational, and egregious. The decision ignores over 60 years of settled legal jurisprudence and lumps online gaming with gambling activities. This decision will wipe out the entire Indian gaming industry and lead to lakhs of job losses and the only people benefitting from this will be anti-national illegal offshore platforms.
It is very unfortunate that when the Central Government has been supporting the industry – in terms of online gaming rules, clarity on TDS, etc that such a legally untenable decision has been taken, ignoring the views of most GoM states who studied this matter in detail.”
Earlier, as per latest info, the Group of Ministers have agreed to 28% GST being levied on horse racing online gaming, and casinos.
On the 28% GST levied on online gaming, Mitesh Gangar, Co- Founder and Director, PlayerzPot said, “The GST council’s decision to levy 28% GST on total face value on online gaming will corner the gaming industry in a big way. The overall operations will not be feasible. The high tax burden will completely restrict the cash flow, limiting a company’s ability to invest in research, innovation, expansion or survival. The higher burden will also put a blocker on India’s massive gaming industry and deter the new player from entering the industry. The rising gaming economy will take a big hit and trigger economic stress, restrict job creation and curtail economic growth within the sector.”
Akshat Khetan, Mumbai-based corporate and legal advisor, said, “This move is extraordinarily injurious to the endurance of the online gaming industry. This move has ignored that there is a difference between gaming and gambling.”
The Union Finance Minister of India, Nirmala Sitharaman is all set to chair the 50th GST Council meeting in New Delhi today. This meeting sees the Group of Ministers (GoM) discuss topics like taxation on horse racing alongside online gaming, and casinos.
Apart from that, the Council is expected to finalise the GST Tribunal constitution and its benches. It is also expected to take key decisions on GST related issues like administrative procedures., exemptions, tax rates, and thresholds. This upcoming GST Council meeting is set to have a significant impact on the GST implementation in India.
The future course of taxation for casinos, horse racing and online gaming industry depends on how things work out in this meeting. Gutshot Magazine will provide all the latest updates in regards to the online gaming industry, casino, and horse racing at the 50th GST Council meeting.
Earlier, India’s Finance Minister Nirmala Sitharaman proposed a tax rate of 28 per cent for online gaming. It was seen as a major challenge for a category of gaming startups in India. The online gaming sector was categorised in three heads.
The first category consists of participant-based fantasy teams, and fantasy sports. The second one involves the games of skill versus like poker, rummy etc. with e-sports encompassing the third category.
Apart from the taxation policies on horse racing, casino, and online gaming, this GST council meeting will also see topics like tax exemption on food and beverage sold inside cinema halls being discussed. They will also touch upon topics like tax exemption on medicines that cost over ₹36 Lakh as well as Goods and Service Tax exemption on the import of Dinutuximab (a cancer drug). Alongside that, it is also reported that tax being on MUVs and SUVs will be talked, with tax exemptions discussed for satellite launch services as well.
Smit is a sports writer at Gutshot Magazine. After completing his Bachelor’s in Mass Media, and a Master’s degree in Sports Management, this sports fanatic uses articles as a tool to express his opinions. Bring up cricket or football and you will find this usually quiet guy speak for hours! He also co-heads the official supporters club of Chelsea FC in Mumbai, wherein he hosts screenings, football meets and other such events.
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