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28% GST on Online Gaming from October 1: Sitharaman

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NEW DELHI, Aug 2: On-line gaming will be taxed at the rate of 28 per cent of the full face value of the bets placed. The decision was taken at a meeting of the GST Council on Wednesday and it will be implemented from October 1.

The Union Finance Minister Nirmala Sitharaman after the Council’s meeting said the policy may be reviewed six months from implementation.

Addressing a press conference Ms Sitharaman said the council in its last meeting had taken a decision on taxing all betting and gaming related activities, casinos, horse racing, after three full years of Ministerial group looking at the issue. “It was decided to tax them at 28% on the full face value. Today, the meeting had a specific agenda of what amendments have to be made to the GST law.”

Ms Sitharaman said the October 1 date of implementation would be followed despite different State Ministers expressing concerns, and requesting reviews. “Minister from Delhi wanted the whole thing reviewed and asked for it to be sent back to the GoM…Then Goa and Sikkim who had interests in casinos, also felt the decision taken last time hurts their interests, although they agreed on the higher levy of 28%, but to be levied on the gross gaming revenue rather than the face value,” she said adding that both Goa and Sikkim also wanted a reconsideration on casinos.

The Finance Minister informed that the Tamil Nadu Finance Minister had urged her in a letter to make sure that their concerns are taken on board. Since the State has banned online games, he was apprehensive if the 28% tax will dilute or undermine the ban, she said.

“There were other Ministers from States like Chhattisgarh, Karnataka, West Bengal, Bihar and Uttar Pradesh, who felt that we had already discussed this issue for a long time and the last meeting’s decision should be implemented at the earliest. Maharashtra and Gujarat also joined in this group.”

“We had Delhi dissenting on online gaming, Goa and Sikkim requested Gross Gaming Revenue to be taxed, and Tamil Nadu wanted the language to state that where ban is in place, the tax cannot be levied,” Ms Sitharaman said.

The Finance Minister said they expect it to be effective from October 1, “and because Goa and Sikkim kept appealing that they were small States and needed consideration, the Council agreed to come back after six months [after implementation] to review the way in which this is getting implemented.”

On the valuation of supply of online gaming and supply of actionable claims in casinos, the Council recommended that it may be done based on the amount paid or payable to, or deposited to the supplier by, or on behalf of the player, at the time of entry. So if someone enters a casino with ₹1,000 of chips, plays a round and wins ₹300, the tax will not be levied on ₹1300, but on ₹1,000 only.

Revenue Secretary Sanjay Malhotra said this was an enabling provision that was being introduced in the GST laws. “So if there’s any review relating to the valuations or the rates, they can be done with a simple notification or change in the rules.” “Amendments are not retrospective, but this amendment is more of a clarification because betting, gambling and lottery are already included as actionable activities. Online gaming, horse racing and casinos are also in the nature of betting only. The High Court of Karnataka has not upheld that stand. We have filed a special leave petition on the matter yesterday and whatever the Supreme Court decides, will prevail.”

(Manas Dasgupta)