GST Council to tax online gaming, casinos and horse racing at 28%

The industry had called for the tax to be applied on GGR not the full face value.

India.- The Goods and Services Tax (GST) Council has finally taken a decision on tax rates for online gaming. At the 50th GST Council meeting, it decided to impose a tax rate of 28 per cent on the full face value amount for online gaming, casinos and horse racing betting.

The implementation of the new rate will be carried out once the GST law undergoes the necessary amendments. Companies had called for GST to be levied on gross gaming revenue (GGR), but the council opted for the tax rate based on the full face value.

Finance minister Nirmala Sitharaman confirmed during a press conference that the same tax rate would also be applied to casinos and horse racing. Sitharaman said the intention is not to harm the online gaming industry or states with casinos and that extensive discussions considered a range of suggestions.

The distinction between games of skill and games of chance was not incorporated into the decision. However, Maharashtra GST Council member Sudhir Mungantiwar stressed the need for differentiation between the two.

The Council took into account a report submitted by the Group of Ministers (GoM) in June 2022. While many online gaming firms welcomed the 28 per cent rate, they expressed disapproval of the tax being imposed on the amount inclusive of entry fees. They argued the decision deviated from international practices and could potentially harm smaller startups.