New GST Rates on E-Gaming, Casinos, & Horse Racing Effective from October 1

The Finance Ministry has officially announced October 1 as the implementation date for the revised GST law provisions, bringing significant changes to the taxation of e-gaming, casinos, and horse racing.

These amendments mark a shift in the treatment of these activities as "actionable claims," aligning them with lottery, betting, and gambling, subjecting them to a 28% Goods and Services Tax (GST) on the full face value of bets.

Key Amendments and Implications:

According to the modifications to the Central GST Act, the revised provisions make it clear that e-gaming, casinos, and horse racing will now fall under the category of "actionable claims."

This designation requires them to be taxed at a rate of 28% on the entire face value of bets. Offshore online gaming platforms are now mandated to register in India and comply with domestic tax laws.

Legislative Background:

In July and August meetings, the GST Council, comprising finance ministers from the Centre and states, approved these amendments. The decision was to classify online gaming, casinos, and horse racing as taxable actionable claims, affirming that these activities would attract a 28% tax on the full value of bets.

The Parliament subsequently passed amendments to the Central GST and Integrated GST laws to enforce the GST Council's decisions.

Implementation Details:

The Finance Ministry's recent notification establishes October 1 as the appointed date for the implementation of these provisions. The GST Council, in its August meeting, had decided that the revised classification and taxation provisions would come into effect from this date.

A review of the implementation is scheduled after six months, in April 2024.

GST Council's Decision and Future Reviews:

The decision by the GST Council reflects a comprehensive approach to include these recreational activities within the ambit of actionable claims. The six-month review in April 2024 indicates the Council's commitment to assessing the impact of these changes and making necessary adjustments if required.

Some other relevant facts about the new GST rates:

• The GST Council, comprising finance ministers of the Centre and states, had approved the amendments to the law in July and August.

• Parliament passed the amendments to the Central GST and Integrated GST laws in September.

• The Finance Ministry has now notified that October 1 will be the appointed date for implementation of the new rates.

• The GST Council had proposed to review the implementation of the new rates after six months, in April 2024.

The new GST rates are a major development for the online gaming industry in India. It remains to be seen how the industry will respond to the changes.