GST Council to take decision on online gaming taxes in July

Online gambling taxation will be discussed at the 50th GST Council meeting on July 11.

India.- The Goods and Services Tax (GST) Council is expected to finally take a decision on tax rates for online gaming at the 50th GST Council meeting, scheduled to take place on July 11, 2023. A decision was due to be made at the previous meeting, but the GST Council was unable to reach a consensus due to various factors.

One of the key aspects under consideration is the tax rate for contest entry amount (CEA) in online games, encompassing both skill-based and chance-based games. The Group of Ministers (GoM) report suggests a uniform tax rate of 28 per cent on CEA for all online games. However, stakeholders argue that games of skill and games of chance should be treated differently.

According to G2G News, John Joseph, former chair of the Central Board of Indirect Taxes and Customs (CBIC), has emphasised the need for the GST Council to differentiate between games of skill and games of chance. Lakshmikumaran & Sridharan (LKS) Attorneys, an Indian law firm, has released an analysis supporting this argument.

They also highlighted the global trend of taxing online gaming based on Gross Gaming Revenue (GGR), with tax rates ranging from 15 per cent to 20 per cent in developed nations. One key argument is the ruling by the Karnataka High Court, which classified games on the Gameskraft platform as games of skill rather than gambling.

Advocates for the online gaming industry also contend that imposing a 28 per cent GST rate on CEA would adversely impact the sector’s growth potential. They propose that the tax should be levied on gross gaming revenue (GGR) instead.