The Goods and Services Tax (GST) at a uniform rate of 28 per cent on full face value for online money gaming, casinos, and horse racing is expected to be implemented from October 1.

The GST Council took a near unanimous decision to this effect on Wednesday while also agreeing to review the mechanism six months post-implementation. The Council simultaneously gave the same immediate minor relief to the industry.

ALSO READ | Mixed reaction as GST Council green-lights 28% tax

“Valuation of supply of online gaming and actionable claims in casinos may be done based on the amount paid or payable to or deposited with the supplier or on behalf of the player, excluding the amount entered into games based on the winnings of previous games,” Finance Minister Nirmala Sitharman said in a press conference post-GST Council meeting.

In other words, if one has placed a bet of ₹1,000 for online gaming or horse racing or bought a chip of ₹1,000 in casinos, he will need to pay GST at the rate of 28 per cent. If he wins, say, ₹300, and the total amount in the next bet or chip becomes ₹1,300, then he will not be required to pay GST on the redeployed winning amount of ₹300. However, if he loses ₹1,000 and places another ₹1,000, then that will be considered a fresh bet or chip and attract 28 per cent GST.

Sitharaman informed that the Minister from Delhi asked that the taxation matter, especially pertaining to online gaming, be sent back to the GoM.

Ministers from Goa and Sikkim called for a review of 28 per cent on the entire face value as against Gross Gaming Revenue (GGR or service fee charged) in the case of casinos, as this will hurt their interests considering they are small States. Andhra Pradesh pitched in by saying there should be a “large heart” and the valuation base should be considered.

Review in 6 months

“The recommendation to impose a uniform 28 per cent will be reviewed six months after the date of implementation, as we will have some experience by then,” she said. Revenue Secretary Sanjay Malhotra added that any change required in the rate or valuation can be done through a notification, and this will not require any amendment in the law.

A Finance Ministry statement said that the Council recommended amendments in Schedule III of the CGST Act, 2017, to provide clarity on the taxation of supplies in casinos, horse racing, and online gaming. A specific provision will be inserted in the IGST Act, 2017 to provide for liability to pay GST on the supply of online money gaming by a supplier located outside India to a person in India, for single registration in India for the said supplier through a simplified registration scheme, and also for blocking access by the public to any information generated, transmitted, received, or hosted in any computer resource used for the supply of online money gaming by such a supplier in case of failure to comply with the provisions of registration and payment of tax.

“The bill to include these amendments is expected to be introduced in the ongoing session of Parliament,” Sitharaman said. The expectation is that all States will make changes in SGST laws in the next two months. She also informed that as Tamil Nadu has banned online gaming, it asked for provisions in the law to ensure the same. She said that the amendment will ensure that if something is illegal in one State, that should be followed.

Regarding apprehension among many in the online gaming industry that off-shore platforms will have an advantage as they can avoid deducting GST, the Revenue Secretary said: “In case of non-compliance, we will approach the IT Ministry to take action, including blocking the site.” Also, a control room is being set up in the DG Intelligence system to monitor offshore platforms that are not complying and take action.

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