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GST Council To Reconvene On 2nd August To Determine Tax On Online Gaming

The Goods and Services Tax (GST) Council is all set to meet on 2nd August 2023. They are all set to meet virtually and discuss the legal amendments necessary on the 28% levy on online gaming, casinos and horse racing.

Earlier, Union Finance Minister Nirmala Sitharaman had stated that the Group of Ministers (GoM) had reached a consensus over levying 28% GST on the full value of online gaming, horse racing and casinos. The apex decision-making body for the indirect tax earlier decided to impose the maximum 28% slab on the full face value during their meeting on 11th July. 

The proposed bill received a lot of backlash and criticism from the Indian online gaming industry, with many officials stating that it would kill the sector altogether. From domestic companies to foreign investors, members of the online gaming industry called the Prime Minister’s Office to review the tax saying how the proposed bill will discourage investments in the sector.

Following the meeting, the GST Council is set to gather in a special meeting which is expected to thrash out issues. The agenda for the upcoming meeting will be to eliminate matters like repetitive taxation in determining the full face value, among other matters that were flagged by the gaming industry to the government.

GST council to determine tax on online gaming

The central government is likely to introduce the GST amendment bill in the ongoing monsoon session of the parliament. They are said to have decided against differentiating between online games of chance and games of skill. While many feel there might be changes, officials are reported to have ruled out any rethink and claimed that the upcoming meeting is just to firm up legal changes and address technical details.

The Economic Times has quoted a source about an unnamed government official stating, “The council will deliberate upon the changes to the GST law to implement the decision taken at its last meeting.” Another official is quoted as saying, “There are concerns as to (whether) it will lead to repetitive taxation…The law has to be clear and unambiguous.” While stating how the draft amendment is almost ready with the law committees working on some fine print.

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Jay Sayta, a technology and gaming lawyer has also shared his views on the upcoming GST Council meeting. He says, “It is surprising that the GST Council is going to conduct an emergency meeting by video conference on 2nd August to discuss the modalities of implementation of 28% GST on online gaming, casinos and horse racing.

For convening a regular meeting, as per Regulation 3 of the Procedure & Conduct of Business Regulations of GST Council, a 7-day notice has to be given to all members prior to conducting the meeting. Don’t think there is enough time to send this notice if it has not already been sent.

It may be noted that an emergency meeting of the council can be conducted with prior approval of the Union Finance Minister with a 2-day notice to members. It seems that this meeting is an emergency meeting of the council if a 7-day notice is not already given.

For meetings by video-conferencing, as per Reg 5(2), no voting can be conducted & the decision has to be deferred. Thus, if there is no consensus on the manner of taxing online gaming, casinos & horse-racing in the 2nd August meeting & voting is necessitated or asked by any member, the decision has to be deferred until a physical meeting takes place.

The outcome of the meeting will be keenly watched especially since few states & industry have opposed the move to tax all 3 activities at face value.”

Image Credits: The Mint

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