Implementation of 28% GST on casinos, online gaming likely from Oct 1, review after six months: FM

Union Finance Minister Nirmala Sitharaman on Wednesday said 28 per cent GST on full face value for online gaming, casinos and horse racing is likely to be implemented from October 1. 

The Goods and Services Tax (GST) Council, in its meeting on Wednesday, has finalised the modalities for determination of supply value in online gaming and casinos for levying 28 per cent tax, said Sitharaman.

"GST Council agrees to come back with a position review after six months from October 1, 2023," said Sitharaman at a press conference in New Delhi.

Actionable claims in casinos may be done based on the amount paid or payable to/deposited with the supplier excluding the amount entered into games/bets or the total value (bet plus profit), said Sitharaman.

GST will be levied 28% at the entry-level (amount deposited with online platform) not on every bet or winnings, she clarified.

"Minister representing Delhi wanted the decision of 28% GST on online gaming (on face value) to be reviewed. Goa and Sikkim also shared that the decision does hurt their revenues. Goa appealed that the tax should be imposed on Gross gaming revenue (GGR) and not face value. Sikkim requested for a re-consideration on casinos," said Sitharaman.

At the virtual meeting, chaired by Sitharaman, GST Council members approved the changes proposed in the GST law.

At July 11 meeting, the GST Council decided to levy a uniform 28 per cent tax on full face value for online gaming, casinos and horse racing.

"FIFS & EGF, which represent 50 Indian online gaming companies, appreciate the Government addressing the industry’s concerns on the issue of repeat taxation. 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," said Fderation of Indian Fantasy Sports and E-Gaming Federation on the decision of the 51st GST Council meeting.

A Group of Ministers (GoM) was constituted to look into the issues related to taxation on casinos, horse racing and online gaming. The GoM submitted its first report in June 2022 and it was placed before the GST Council in its 47th GST Council meeting wherein, it was decided that the GoM may relook into all the issues once again. The GoM submitted its report and it was placed before the recently held 50th GST Council meeting. The GoM, in its second report,  recommended that since no consensus could be reached on whether the activities of online gaming, horse racing and casinos should be taxed at 28 per cent on the full-face value of bets placed and left it on the GST Council to decide.

Goods and Services Tax was introduced in the country with effect from July 1, 2017.