To discourage gambling and betting-related games, the GST Council is likely to hike the tax rates for online gaming from 18% to 28%. A Group of Ministers, set up by the Ministry of Finance to look into matters related to the GST regime covering online gaming, casinos, and race courses, may suggest a flat GST rate of 28% on online gaming soon.
According to a report, a final recommendation on the revised rates, as also on whether the levy should be on the gross gaming revenue or per transaction, is likely to be disclosed in the next week’s meeting of the GoM headed by Meghalaya Chief Minister Conrad Sangma. The GST council will take a final call after that.
The meeting took place yesterday where the members discussed the valuation of services provided by casinos and online gaming. There was a broad consensus on a flat 28% tax rate, however, there was no consensus regarding gross gaming revenue (GGR) or on the basis of per transaction.
Furthermore, a few members raised concerns that learning-based gaming should remain in the 18% slab as they are not harmful and can’t lead to gambling and betting.
The online gaming industry has opposed the proposal to levy GST on the entry fee, along with a 115% surcharge, and is instead advocating for levying tax only on GGR. However, some stakeholders feel laws and regulations related to online games are underdeveloped in India and are becoming a major cause of concern for investigating authorities, companies, and customers.
Currently, a tax rate of 18% is levied on the commission collected by the online gaming platforms for each game not involving betting or gambling. The GST rate applicable to online games involving betting or gambling is 28%.
On horse racing, GST is levied at 28% of the total bet value.
In the past couple of years, the online gaming industry has seen an upscale in user base due to better internet penetration and the availability of smartphones apart from personal computers and tablets. India has more than 560 Mn internet users, making it a growing market for the online gaming industry.
Analysts said the GST Council might categorize actionable claims as ‘services’ by putting it under Section 7 of the CGST Act for taxation purposes without getting into the debate of games of skill or chance.
Source: Financial Express
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