GST Council to Make Final Decision on 28% Levy for Online Gaming, Casinos & Horse Racing Today

Gaming Industry Requests Government to Make Distinction Between Games of Chance and Games of Skill

The GST council will meet on Wednesday to take a final call on the proposal to levy 28% GST on online gaming, casinos and horse racing. The decision had led to disappointment in the gaming industry, which had even written to the finance ministry, urging it to revoke the decision.

The meeting of the GST council, which is headed by Finance Minister Nirmala Sitharaman, will be held virtually. On July 11, the GST council decided that there will be a 28 per cent GST levy on full value of gaming, horse racing and casinos.

After last month's meeting, a law committee consisting of Central and state tax officers, had prepared draft rules for consideration by the GST council, on computation of supply value for tax purposes.

The committee has suggested inclusion of a new rule under which the value of supply of online gaming would be the total amount deposited with the online gaming platforms by way of money or virtual digital assets on behalf of the player.

For casinos, the committee has proposed that the supply value would be the amount paid by a player for the purchase of tokens, chips, coins, or tickets.

The gaming industry has requested the government to make a distinction between games of chance like gambling and games of skill. They argue that games of skill should be taxed at a lower rate, as they are not as addictive as games of chance.

The GST council is expected to take a final call on the proposal to levy 28% GST on online gaming, casinos and horse racing on Wednesday.

Background

During a previous meeting on July 11, the GST Council decided on a 28% GST levy applicable to the entire value of gaming, horse racing, and casinos. This decision was met with disappointment from the gaming industry, prompting them to write to the finance ministry, urging for a reconsideration of the decision.

The Crucial Meeting

The upcoming virtual meeting of the GST Council on Wednesday is expected to provide a final verdict on the proposed 28% GST levy for online gaming, casinos, and horse racing. Stakeholders in the gaming industry are closely watching this development, hoping for a favorable outcome.

Draft Rules and Supply Value

In the aftermath of last month's meeting, a law committee comprised of Central and state tax officers has prepared draft rules for the GST Council's consideration, specifically concerning the computation of supply value for tax purposes.

The committee has recommended a new rule stating that the value of supply for online gaming will be calculated as the total amount deposited by players with the online gaming platforms, involving money or virtual digital assets.

Regarding casinos, the committee's proposal indicates that the supply value would be based on the amount paid by a player to purchase tokens, chips, coins, or tickets.

The Gaming Industry's Request

In light of the 28% GST levy proposal, the gaming industry has approached the government with a plea to differentiate between games of chance, such as gambling, and games of skill.

This distinction is being sought to ensure a fair and balanced approach to tax regulations that can accommodate the diverse nature of gaming activities.

Some relevant and latest facts for the above news:

• The online gaming industry in India is growing rapidly, with revenue expected to reach $3.9 billion by 2025.

• The government's decision to levy 28% GST on online gaming has been met with criticism from the gaming industry, who argue that it will stifle growth and innovation in the sector.

• The gaming industry has requested the government to make a distinction between games of chance and games of skill, as they believe that games of skill should be taxed at a lower rate.

• The GST council is expected to take a final call on the proposal to levy 28% GST on online gaming, casinos and horse racing on Wednesday.

Here are some additional details that may be relevant to the news article:

• The law committee that has prepared draft rules for consideration by the GST council is headed by the Central Board of Indirect Taxes and Customs (CBIC) chairman, Vivek Johri.

• The committee has also proposed that the value of supply of online gaming would be the total amount deposited with the online gaming platforms by way of money or virtual digital assets on behalf of the player, including the amount used for purchasing virtual items such as avatars, weapons, or other in-game content.

• The gaming industry has argued that the 28% GST rate is too high, and that it will make it difficult for them to compete with international gaming companies. They have also argued that the 28% GST rate will make it more difficult for them to attract investment.

Conclusion:

The upcoming GST Council meeting, headed by Finance Minister Nirmala Sitharaman, holds immense significance for the gaming industry as it determines the 28% GST levy on online gaming, casinos, and horse racing.

The decision could have far-reaching implications on the sector's growth and future.

The law committee's draft rules and the gaming industry's appeal add complexity to the debate on tax regulations for the diverse gaming landscape.