Next GST Council Meet: Rules to be approve to implement GST 28% on Online Gaming, Casinos

The Goods and Services Tax (GST) Council will meet by videoconference on August 2 to make a final decision on the levy of a 28% GST on online gaming, casinos, and horse racing, despite authorities insisting that there would be no backtracking on the idea. The specifics of the essential legislative amendments and regulation changes will be presented to the Council at the meeting, according to a senior government official.

“The GST Council will meet via videoconference on August 2 to resolve this issue. We will present the proposed changes to the GST law and rules to the Council for approval,” the official added.

While the source reiterated that the rate is not being reconsidered, the issue of whether the 28% GST rate should be levied on entrance value or on each bet is likely to be settled by the Council at its meeting. “The proposal has not been revised. The GST laws and regulations will be amended in accordance with the decision made by Council at the previous meeting. The earlier decision was only in in principle,” the official explained.

According to the official, the law modification will offer detailed specifics regarding the rate, the mechanism of the face value on which the 28% GST rate would be applied for online gambling, casinos, and horse racing.

The GST Council decided on July 11 to charge a uniform 28% tax on the entire face value for these kinds of businesses. To simplify implementation, a law reform was planned to be adopted in the monsoon session of Parliament that would bring online gaming and horse racing within the category of actionable claim and allow their taxes without differentiating between games of skill and chance.

While the government claims that the decision is not designed to hurt any industry, online gaming companies have raised worries about the move’s possible impact on their operations, citing issues about volume and general sustainability.

The standard charge of 28% will apply to the face value of chips purchased in casinos, the whole amount of bets placed with bookmakers or totalisators in horse racing, and the full value of bets put in online gaming. A tax on gross gaming revenue or a platform fee, which is the amount paid to access gambling services, was also discussed but was not favoured.

Several investor organisations have written to the Prime Minister, requesting a review of the 28% GST on online gaming, stating that this decision could jeopardise $4 billion in future investments in the industry.

Similarly, in an open letter to the government, more than a hundred industry associations representing major gaming companies, including Dream11 and Mobile Premier League, expressed their concerns, stating that the tax decision has put the industry in significant distress and could have devastating consequences for the companies, even leading to business closures.