GST Council to review 28% GST on online gaming and casinos in 2024

The Goods and Services Tax Council will reevaluate the tax in the first quarter.

India.- The Goods and Services Tax (GST) Council is to reexamine the application of a 28 per cent GST levy on online gaming, casinos and horse racing in the first quarter of the next fiscal year. Several firms have taken legal action in response to accumulated tax liabilities dating back to 2017.

GST was previously applied to the total turnover of gaming firms. However, recent changes have led to the taxation of chips purchased, resulting in a more complex computation process. Disputes between companies and the government regarding tax claims further delay the tax collection process.

The GST Council’s decision on July 11, 2023, established the 28 per cent GST rate for the full face value of bets in online gaming, casinos, and horseracing, settling debates over whether these activities were games of skill or games of chance. The former category typically attracts a lower 18 per cent GST rate.

Despite the impending review, the GST Council has not convened a meeting to specifically address the mounting tax dues of certain online gaming entities. Officials clarified that companies have the right to appeal against tax demands, but these appeals should not impact the decisions made on August 2, which included the inclusion of online gaming and horseracing in the list of taxable actionable claims.

The review of issues such as valuation methodology and tax rates for the sector is expected to occur six months after the implementation of the 51st council decision, which is estimated to take place in April or May next year.

Several online gaming companies, including Dream11, have taken legal action against the retrospective imposition of 28 per cent GST on bets placed on their platforms. Other companies in the gaming and casino industry have also received show-cause notices for non-payment of 28 per cent GST on the full-face value of bets.