NEW DELHI: The GST Council on Wednesday decided to retain 28% GST rate on online gaming, casinos and horse racing on the face value of bets despite Delhi, Goa and Sikkim expressed their dissent. The 28% tax on these items will be effective from October 1, and the Council will review its decision six months after it comes into effect, Finance Minister Niramala Sitharaman said on Wednesday.
The minister at the press briefing after the 51st GST Council meeting clarified that the 28% tax in case of online gaming will be levied only at the time of entry-level and not at the redeployment of profits. “The Council agreed today (Wednesday) to come back after six months to review the way, in which this is getting implemented. Delhi, Goa and Sikkim have sought a review of the 28% tax on online gaming and casinos,” Sitharaman said. The minister added that only Delhi wanted the issue of 28% tax on online gaming to be referred to the Group of Ministers for reconsideration. Sikkim and Goa wanted 28% tax on the gross gaming revenue but not on the full face value.
Commenting on the Council’s decision on online gaming, Pratik Jain, Partner at PwC India, said, “GST council has stayed firm on its decision to tax online gaming at 28% on gross value collected. However, it has been mentioned that the GST rate might be reviewed after a few months, which gives some hope to the industry. It has also been clarified that GST would apply on the entire sum collected upfront and subsequently, the proceeds from winning won’t be taxed. It is a welcome clarification as there was some confusion on the issue.”
Meanwhile, Revenue Secretary Sanjay Malhotra said the government will set up a Directorate General of GST Intelligence (DGGI) office cell to keep track of the websites and portals that provide services without paying taxes. He added that the foreign entities, which try to evade paying taxes will be penalised under the income tax act. Malhotra also added that the offshore entities providing online gaming services in the country will have to register themselves.