The GST Council on Wednesday decided to implement the 28 per cent levy on online gaming and casinos, most likely from October 1 onwards.
It was further decided that once the GST levy becomes applicable on October 1, it will be reviewed after six months, and if need arises, changes may be made in it.
The decision was taken during the GST Council meeting, which was held virtually by finance minister Nirmala Sitharaman.
In other words, the GST Council maintained status quo on it's July 11 decision to levy 28 per cent GST on online gaming and casinos on face value. There was near unanimity on levying 28 per cent GST on online gaming and racing, Finance Minister Sitharaman told reporters after the meeting.
The meeting had been called amid the online gaming industry's representations to the government, urging it to reconsider its last month's decision to levy 28 per cent GST on these activities, claiming that such huge taxation would break the back of the nascent industry.
Sitharaman said that it was decided to review the GST levy on online gaming and casinos, six months after its implementation, i.e. in April 2024.
She said that it was decided to implement the 28 per cent GST levy on online gaming and casinos from October 1 onwards as at least two months would be required to amend the Central GST Act and the states' GST legislations. The bill to amend the GST Act will hopefully be introduced during the ongoing Monsoon session, she said.
The decision to amend the CGST law however had dissenting voices as Finance Ministers of Delhi, Goa, and Sikkim objected to it. At the same time Sitharaman said that West Bengal, Bihar, Chhattisgarh, Uttar Pradesh, Himachal Pradesh, Maharashtra and Gujarat asked for 28 per cent GST levy on face value on online gaming and casinos at the earliest.
The Delhi government wanted the 28 per cent levy on online gaming reviewed, she said. Sikkim and Goa, on the other hand, sought reconsideration of the levy on casinos.
Tamil Nadu’s representative expressed apprehension about what a 28 per cent tax on online gaming would mean for the state as it is banned in the state, Sitharaman added.
Explaining the details of GST levy, she said that the value of supply of online gaming and actionable claim in casinos will be on entry level, pointing out that the Council discussed that if 28 per cent is taxed on gross gaming revenue (GGR), the net revenue will be only 11-12 per cent. The current 18 per cent GGR results in net 8-9 per cent in terms of revenue, Sitharaman added.
Revenue Secretary Sanjay Malhotra said that voting on any decision was not required at the meeting, as only a few states dissented. "If the review after six months of 28 per cent GST on casinos, online gaming requires some change in the tax rate, the government will be able to do it via a notification and there won't be any requirement for the law to be amended," he said.
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