India set to implement 28 per cent GST rate on online gaming from October 1

New Delhi: The Central Board of Indirect Taxes and Customs (CBIC) Chairman, Sanjay Agarwal, has announced that India is prepared to implement a 28 per cent Goods and Services Tax (GST) rate on online gaming starting from October 1.

This move comes with the consensus of all Indian states and follows the recent passage of amendments to GST laws in the Lok Sabha.
CBIC Chairman Sanjay Agarwal said, “We are ready to implement a 28 per cent GST rate on online gaming from October 1 with the consent of all the states. The law for GST rate on online gaming will have to be passed by the assembly of states. Show cause notices to some online gaming companies are legal process.”

On August 11, the Lok Sabha, during its final session of the monsoon season, passed amendments to two Goods and Service Tax (GST) laws with a voice vote and minimal debate.
These amendments relate to the Integrated Goods and Services Tax (Amendment) Bill, 2023, and the Central Goods and Services Tax (Amendment) Bill, 2023. The primary aim of these legislative changes is to introduce a 28 per cent GST for online gaming, casinos, and horse racing.

This legislative action aligns with the decision made by the Goods and Services Tax (GST) Council during its 51st meeting on August 2.
The Council had resolved to expedite the process of amending the relevant Acts necessary to impose taxation on online gaming, casinos, and horse racing.
The central government asserts that these amendments will provide much-needed clarity regarding the taxation of supplies in casinos, horse racing, and online gaming.

To ensure compliance, the GST Council has recommended inserting specific provisions in the IGST Act, 2017.
These provisions deal with the liability to pay GST on the supply of online money gaming from foreign suppliers to Indian customers, along with measures for blocking access to any related information in case of non-compliance.
Additionally, the GST Council has advised that the valuation of online gaming and actionable claims in casinos should be based on the amount paid or payable to the supplier by or on behalf of the player.

This approach excludes the amount placed in games or bets from previous winnings. This valuation method aims to provide clarity and consistency in the taxation of these sectors.

Notably, the GST Council had previously recommended a 28 per cent GST rate on the full face value for Casinos, Horse Racing, and Online Gaming in its 50th meeting held on July 11.

This rate applies irrespective of whether these activities involve games of skill or chance. The recent amendments to the GST laws aim to offer a uniform taxation framework for these sectors and resolve any lingering ambiguities.
India's move to tax online gaming is part of broader efforts to bring various sectors under the GST framework and streamline tax collections.