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Karnataka Notifies 161 Online Gaming Firms To Comply With New GST Rates

The much talked about 28% GST being implemented on online gaming, casinos, and horse racing, came into effect on 1st October 2023. Within a week, the Karnataka GST authorities shared a written ordinance to 161 online gaming firms and asked them to file their returns and comply with the new GST rate.

A senior official reportedly mentioned the following to The Economic Times. “We have done this to be doubly sure that they collect taxes as per the new rate diligently, and not continue with 18% GST as before.” The source has also gone on to claim how the authorities do not want to see any company later claim about being unaware of the new GST rates.

As per reports, all online gaming firms have to pay taxes collected at the revised GST rate in October and file returns for October 2023 transactions till 20th November. C Shikha, Karnataka state’s commercial taxes commissioner, reportedly thinks that the annual revenue of the state government might increase by ₹1,500 Crore, citing the new GST rate.

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However, it is worth noting that every state in India might not be able to enforce the new GST rate from 1st October. This is because many state governments have not yet amended their respective GST regulations. Earlier, the 18% GST was divided into 9% State GST (SGST) and 9% Central GST (CGST). 

The new rule, which sees 28% GST being implied, sees both the CGST and SGST rate go up to 14% each. The increased GST rate has seen a lot of pushback from Karnataka Information Technology and Bio-Technology Minister Priyank Kharge.

He has criticised the decision of the GST Council to hike the GST rate to 28%. As per news reports Kharge has claimed that a blanket ban without distinguishing chance-based games and skill games will harm the online gaming industry.

Given the new laws, online gaming firms have requested a reconsideration from the GST Council. India’s Finance Minister, Nirmala Sitharaman, had also stated how the law will be reviewed after six months from implementation. It remains interesting to see what the future holds for the online gaming industry and if the government will make any further amendments in the future. 

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