One of the Key Takeaways from the 51st GST Council Meeting Held On August 2 at 4:00 PM was the Decision to Implement 28% GST On Online Gaming in India effective October 1.
SIN TAX
The Government of India has decided to implement 28% GST on the Full Value Of Bet Placed on Online Gaming. 28% Tax, also known as the SIN TAX, is the same Tax imposed on casinos, horse racing and Betting.
Now the Government has decided to pull online Gaming into the same category as these activities. Online Gaming has been gaining a lot of friction over the last few years and could be the reason for the Tax implementation.
The Government smelled profit by imposing GST on online Gaming in India.
Your Skill Doesnt Matter
Online Gaming World is Divided into Two halves, Game Based On Skills And Based On Chance.
Games Based on Skill shouldn’t be treated like Game Won Through Chance.
But the Government has decided to Place All the games under the same category As Betting.
Key Highlights Of GST Council Meeting
Key Points Discussed In The GST Council Meeting Chaired by the Finance Minister Nirmala Sitharaman:
➢Cancer-related drugs, medicines for rare diseases, and food products for unique medical products are exempt from GST tax.
➢Food served in cinemas will be taxed at 5%, down from 18%.
➢28% GST on Online Gaming In India.
➢GST Rate Cuts on Four Items:
■Uncooked, unfried, and extruded snack palettes will be subject to a 5% GST rate, down from 18%.
■Fish Soluble Paste was reduced from 18% to 5%.
■LD Slag To 5% From 18%.
■Imitation Zari Thread reduced from 12% to 5%.
States Opposing GST On Online Gaming In India
States Like Goa and Shikkim oppose the Tax levied on Full Value.
These states argue the Tax should be implemented on GGR (explained below) and Not The Full Value Of Bets.
TAX Explained
Gaming platforms demand users an entry fee to play a specific game. Assume the sum is ₹100. The platform operator deducts a portion of the entry fee to operate the game and the platform, known as the gross gaming revenue (GGR). The remainder is added to the reward pool. Let’s say the GGR is ₹20.
Until the GST Council Meeting, GGR was subject to 18% taxation, which meant the operator would have to pay ₹3.6 in taxes. However, the most recent provision means that Tax will be paid at 28% on the entry bet (that is, the 100 in our case), bringing the total taxation amount to ₹28.
Gst On Online Gaming In India Will Provide More Profit To The Government.
GST On Online Gaming Before And After
Before the 50th Council Meeting, the GST on online Gaming in India was divided between Games of Chance And Game Of Skill.
Game Of Skills Were Taxed At 18%
Game Of Chance At 24%
But Now They’ll be Judged Under the Same Umbrella And Taxed At 24%.
GST on Gaming Apps
GST On Gaming Apps Like Rummy, Poker, Dream11 And Any Fantasy Leagues will be Taxed At 24%.
What The Gaming World Had To Say?
“The new tax framework, while clarifying and resolving uncertainty, will lead to a very burdensome 350% increase in GST and set the Indian online gaming industry back several years. However, it will allow gaming companies a fighting chance to innovate and rebuild the foundation of gaming in India.”
In a joint statement, the E Gaming Federation and Federation of Indian Fantasy Sports
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